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What to expect! Auto Loan shopping 6 months post BK discharge

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New Contributor

What to expect! Auto Loan shopping 6 months post BK discharge

The details! I was in a car accident which totalled my car. No GAP insurance due to refinancing literally a month ago (but getting a refund for the premium, Yay!). Settlement was what I expected (and fair) and will have to pay additional $3k to close out the loan with Capital One. This means no down payment as my budding emergency fund is now being used for said emergency plus some additonal kicked in from my parents. I did not want to have to to this... and I really wanted to be in a much better spot financially before having to do this again, but it is what it is. I will have a loaner from family but it will only be for possibly a week, maybe two.

 

Question time!

1. Carmax was IIB and we made the decision to surrender the car to them. Loan was with Carmax financing. There was a balance owed after auction of the car, which of course I am not required to pay back, but we really loved Carmax's dealership with the selection and the sales people there are awesome. Can I still go to Carmax to shop? I know Capital One is a lender with them along with others, but will I be blocked from any financing with them due to the IIB of their financing?

2. I had a refinance rate of 9.89% with Captial One in June. I can't do the prequal right now or probably even in the next few weeks until the loan is paid off and my reports update. Might I have a chance with a payoff letter and applying direct at the dealership?

3. I may burst right into tears in the dealership if they come back with an interest rate above 10% considering my 9.89% with Cap1. Be brutally honest with me so that I toughen up before walking into the dealership.

4. Since I will be literally looking for a car immediatly after the loan is paid, what sort of documentation should I make sure I have to avoid the denials because I already have a loan that shows on my credit reports? What roadblocks should I be prepared for.

 

My details

Credit Score: FICO 8 TU 600, EX 610, EQ 618: FICO Auto Score 8 EX 612, Auto Score 2 EX 622

AAoA: 6 years

# of positive trade lines: 15? Is this only open accounts or closed accounts in good standing?

# of negative trade lines: Many marked as IIB with no open or active negatives. Student loans show a 90 day past due back in 2015 but are all in current good standing since 2016.

Income: 64000 a year

Lenght of Employment: 15 years

Previous Loan Experience: Student loans all paid on time except for 90 days late back in 2015, 3 closed and paid positive car loans (the carmax loan does not even show on my credit reports at all, they removed it completely) 

Debt-to-Income (DTI): 24% (this includes the car payment of around $500 and this doesn't include my husbands bills, just mine he just recently started working and is now paying his own cc's)

Year of Car: Looking at 2017 to 2019 SUV

Miles: don't want more than 20 to 30K

Purchase/Refinance: purchase

Requested loan term (XX Months): 72 (plan to refinance again down to 48 like I did this last time once my scores rebound)

Down payment amount: $0 (this is why I am so ticked about this accident... for real)

Co-borrower/Co-Signer: none

Other: Capital One loan will most likely still be showing when I start shopping even though it will have been paid off

9 REPLIES 9
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Regular Contributor

Re: What to expect! Auto Loan shopping 6 months post BK discharge

Carmax has financing for just about everyone who qualifies. They have a payment calculator on their website that allows you to choose a price, add the taxes and click on an apr based on you credit rating (Excellent to Poor).

That being said, I wouldn't go their without a preapproval from another lending institution.
I've been where you are trying to go and I don't wanna go back.
Message 2 of 10
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Frequent Contributor

Re: What to expect! Auto Loan shopping 6 months post BK discharge

Ive been thinking of getting a new car as well. And have been wondering about the no down payment thing. Because I'm wanting to get a new job but want to buy a reliable car first. So that I don't have short employment time at new job when I apply for the loan. So im curious, do dealers or banks let you finance without down payment? Is that possible? And how much are you looking to finance?

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Message 3 of 10
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New Contributor

Re: What to expect! Auto Loan shopping 6 months post BK discharge


@settleordelete wrote:
Carmax has financing for just about everyone who qualifies. They have a payment calculator on their website that allows you to choose a price, add the taxes and click on an apr based on you credit rating (Excellent to Poor).

That being said, I wouldn't go their without a preapproval from another lending institution.

Thanks! I have been playing with their payment caculator. 

 

For a pre-approval, what would you suggest. I am not a member of any Credit Unions. Even if i joined up with one, would my scores just get me a denial? Would they even loan to some new member right off the street?

Message 4 of 10
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New Contributor

Re: What to expect! Auto Loan shopping 6 months post BK discharge


@Roy21 wrote:

Ive been thinking of getting a new car as well. And have been wondering about the no down payment thing. Because I'm wanting to get a new job but want to buy a reliable car first. So that I don't have short employment time at new job when I apply for the loan. So im curious, do dealers or banks let you finance without down payment? Is that possible? And how much are you looking to finance?


My last auto loan was a no down payment loan, but I had also just filed for BK 7 and worked with an amazing dealer who specialized in BK deals. It was a bad interest rate but couldn't be avoided.

 

I too am worried about getting financed now without a down payment. On all 4 past car loans prior I had decent down payments and even with this car loan I was socking away money to make a delayed "down payment" (basically was going to pay down a huge chunk of what I would have put down had I been able to at the time). I don't think I will have a problem getting a loan with no down payment, but the terms are probably going to not be as good as I wish.

Message 5 of 10
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Regular Contributor

Re: What to expect! Auto Loan shopping 6 months post BK discharge

Credit Unions? Penfed, DCU and Navyfed seems to be the most popular mentioned here in the forums. Be sure and do your research before you apply.

I went car shopping in June with loan preapprovals from Toyota Financial, Hyundai Financial, Capital One and BBVA Compass bank. All of which was applied for within 7 days. I was buying two cars so I wasn't taking any chances with my local dealer financing.

Good luck.
I've been where you are trying to go and I don't wanna go back.
Message 6 of 10
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Frequent Contributor

Re: What to expect! Auto Loan shopping 6 months post BK discharge

DCU requires 2 years post discharge for a car loan.

 

If getting a no downpayment loan you will be upside down for a long time so please make sure you get GAP insurance.

It's a very hard thing to swallow owing money on a car that was totalled because insurance didn't cover the loan balance.

 

I did get a semi- decent loan from Chase with no prior relationship about 6 months post discharge but they wanted $5,000 down on $18K new car @7.99%  Semi-decent rate for my credit at the time being 6 months post discharge.

 

 

Message 7 of 10
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Frequent Contributor

Re: What to expect! Auto Loan shopping 6 months post BK discharge

If you are hoping to finance with Capital One again, I would highly recommend finding a way to come up with a down payment. Capital One is VERY reliant on equity position, a down payment can drive the interest rate down considerably with Capital One. For instance I have seen first hand an applicant with $1,000 down qualify for let's say 13% through Cap One, but an additional $200 down ($1,200 total) brought the rate down to 9.5%. In addition, trade-in's even if they are literally worth scrap value only, can significantly reduce the interest rate through Cap One.

 

I understand you are in a difficult spot with paying back the balance owed after the settlement amount with insurance, as well as wanting to maintain emergency funds, but if at all possible I highly recommend waiting until you have some money down to put toward's your purchase in order to get the best term's possible and avoid a future of inequity.

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Message 8 of 10
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Re: What to expect! Auto Loan shopping 6 months post BK discharge

Thanks for this info. Yup... the GAP insurance this was totally my fault. Had no idea that GAP didn't follow the car, only the loan. Luckily making the overage payment won't be a big deal, just a costly mistake. 

 

Been doing some research on this forum and thinking I may have to eat a higher interest rate and just refi as soon as it's possible. I am also starting to think that maybe I should look at a new vehicle, it seems that interest rates are lower for new vehicles and I might have a much easier time refinancing. Payment wise I have a decent budget of $550 and that is my minimum budget and just what I really want to stay at or under. Payment caculators seem to indicate that a new car even with a higher interest rate could be right around there.

Message 9 of 10
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Re: What to expect! Auto Loan shopping 6 months post BK discharge


@SEMO wrote:

If you are hoping to finance with Capital One again, I would highly recommend finding a way to come up with a down payment. Capital One is VERY reliant on equity position, a down payment can drive the interest rate down considerably with Capital One. For instance I have seen first hand an applicant with $1,000 down qualify for let's say 13% through Cap One, but an additional $200 down ($1,200 total) brought the rate down to 9.5%. In addition, trade-in's even if they are literally worth scrap value only, can significantly reduce the interest rate through Cap One.

 

I understand you are in a difficult spot with paying back the balance owed after the settlement amount with insurance, as well as wanting to maintain emergency funds, but if at all possible I highly recommend waiting until you have some money down to put toward's your purchase in order to get the best term's possible and avoid a future of inequity.


Thanks for this advice. I really do wish that I could wait this out, however, it's just not feasible as we are a single car family and this whole situation has left us as a 0 car family. In two to three weeks I will be carless and if I want to keep my job, I need a car. I should be able to very quickly save up the money needed to make a "delayed" down payment by just putting down that 3 grand and refinance though. 

 

We thought about just fianancing a cheap compact car and then in a few months trading it in but I'm not sure that makes sense financially either, plus man trying to fit all my work gear into the trunk of the rental car is just not working out! We kinda need that mid size SUV! Luckily work gives me a stipend a month for the use of my car, so that helps with my payment.

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