Where can I apply? Or do I let a dealership get me into a bad credit loan?

[Swatch]

I'm trying to get a used car. I applied for a personal loan at one of those very high APR companies, because I liked that they had fewer documents required and there wouldn't be a downpayment required, plus what I mention below. (I didn't mind the high APR too much because I think I can pay it all off in 10-15 months.)

However, they are only approving me for about $1700, even though their preapproval process said I could get much more (seems like they were trying to encourage me to apply). I may take it (and add cash) to get a bad car, but then I know I could face expensive repairs sooner.

During the preapproval I had my EQ frozen (I forgot) and apparently they're saying that the EQ report is why they can only approve me for way less. (I wonder if that is not the real reason because I think my TU and EQ are very similar.)

I've read a lot about DCU and even though they take low credit scores, I think it's a stretch for me. I think they would deny or need 20% down. I don't think that's a good option for me because I have a combination of low scores plus low income and self-employment. I have some bad stuff that is only 10 months old, etc (which I think scared that personal loan company). And they have a $5000 loan minimum, so even if downpayment were only $1500, I don't love that option.

Income right around $25K but they could gross up the social security and make it about $27K. My FICO 8 scores are about 630 and 640 but some of my other scores (Auto, Mortgage) are like 620. I think my DTI ratio is fine.

I wondered if I went to a dealership, can they use their existing relationships to get me into a loan without prepay penalties? Could I get one with only 0-10% down? And could I get a loan for a $4000-4900 car? Would it put me in a bad position where they don't give me 5-10% off the posted price? Or even better, is there another site where I could get a loan so I am not tied down to a specific dealership?

I heard that most dealerships are not ok with social security being the main source of income. In my case it's a little under half the income. So far this personal loan place only required 1 year of taxes and it's a little bit of a pain to do another year's but I could. I definitely don't want to get a loan from any place that will have lots of hoops. Can anyone tell me if I have any options? Thanks for any assistance.

[Dj4Money]

 You don't have to consider used.

 CPO is good way to get a new-ish car with the deprecation hit already factored in.

 SSI income is income, they don't care. As long as you meet the threshold which is typically $1,500 a more you'll get financed.

  You can get zero down requirement even with low scores but the car will likely be under $15,000 and new because if a dealer's captive takes you or any banks takes you, they'll get a kick back to offset selling the car to you far below market.

  Go to Capital One Auto Nav and get a pre-approval. Negotiate the price via email, never walk into a dealership ahead of time. 

[donkort]

I was able to lease a car with a 640 Experian Auto Score.  

Give it a try.  Your interest rate will probably be high----but at least you have a better chance of getting a decent car.

Is this a dealership you have dealt with before?

[Swatch]

Thanks. I like used.

Maybe you can tell me more. I got the "preapproval" for Cap One Auto Nav, but then they show that proof of income is requested. I don't have exactly what they want. I can see if they will take other documents, but I am worried they will knock back the amount by a whole lot, just like that personal loan company did.

I am very unsettled that they say "Providing some information upfront can speed up your car-buying process and may help avoid surprises at the dealer." It's very difficult for me to get to the dealership, so I'm trying to have a guarantee before I go if possible. Would a dealer actually negotiate price and run my actual loan before I even test drive or meet them? It seems like most dealers don't want to negotiate at all until you show up. Are they different on Auto Nav?

I am also worried about applying and getting denied as it gets harder to apply for anything else due to the hard pull(s).

[donkort]

I've always gone to the dealership.  This online car thing is very new to me.  I wish I could give suitable advice.  I always lease new cars.

[Swatch]

I read all of the threads I could find in this forum about Auto Nav, so I feel better about it. I sent them a bunch of documents and hope that's enough.

I still hope to get more info about how to handle the dealerships when bringing my own financing. It seems like Capital One wants me to find a few cars in the Auto Nav and submit offers? Is it better to call first?

In some threads, it sounded like it was better to act like a regular customer and not mention the preapproval until the car price is negotiated. That would mean never submitting an offer in the Auto Nav.

[Brian_Earl_Spilner]

Cap1 only needs the documents once. I uploaded my paystubs once in 2018 and they still use them to this day if I check for pre-approval.

I was approved by chase for a new Mazda 3 at $27k, 9.99% with 0 down. My highest score was 601 which was EX auto v8. Took them 2 hours and I didn't set foot in a dealership until I picked up my car, no test drive. Signing of the docs took 30 mins and that included redoing them because they didn't add on GAP insurance at first.

[Brian_Earl_Spilner]

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@Swatch wrote:

I read all of the threads I could find in this forum about Auto Nav, so I feel better about it. I sent them a bunch of documents and hope that's enough.

I still hope to get more info about how to handle the dealerships when bringing my own financing. It seems like Capital One wants me to find a few cars in the Auto Nav and submit offers? Is it better to call first?

In some threads, it sounded like it was better to act like a regular customer and not mention the preapproval until the car price is negotiated. That would mean never submitting an offer in the Auto Nav.

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The beauty of the offer is you work out the loan details and submit it to the dealership ahead of time. They can either take the deal, negotiate, or deny it. If you want to offer 15k on a 30k car, you can. If they want the sale, they'll negotiate because the loan is guaranteed.

[donkort]

Yep....GAP insurance.  Don't forget about that.  It's very important.  It'll prevent many headaches should you happen to get into an accident.

[Swatch]

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@Brian_Earl_Spilner wrote:

Cap1 only needs the documents once. I uploaded my paystubs once in 2018 and they still use them to this day if I check for pre-approval.

I was approved by chase for a new Mazda 3 at $27k, 9.99% with 0 down. My highest score was 601 which was EX auto v8. Took them 2 hours and I didn't set foot in a dealership until I picked up my car, no test drive. Signing of the docs took 30 mins and that included redoing them because they didn't add on GAP insurance at first.

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My income is not straightforward like that. Unfortunately it might even get me a denial. They say if you don't have paystubs you need a checking account where they can see the same regular payments. We will see.

Dealerships would be fine with that for a new vehicle. But with used, they seem to think you are suspicious if you want to buy without seeing and driving it. I actually do want to drive it first, but I didn't know if it was better to make offers to dealerships on the website.