Auto Loans? Fairly new credit, not the best score...

[Anonymous]

I've been carpooling and using buses for a long time now and it's about time I get a car. I've never had a car before and I barely got my license. I only have two credit cards, they have very low credit limits ($500 and $300) and they're pretty high in balances.

According to My Fico Score Stimulator, if I pay off $400 dollars of my whole balance it should rank at 635 - 675, which I'm going to do in around three weeks. If I can, I'll try to pay off even more. Right now it's at 594. The thing is that my oldest credit card is only around 9 months old, and my newer credit card is barely 3 months old.

Does that blank me out of getting a good auto loan? Or even a personal loan for a cheap used car? Once I get my credit at a decent rate where should I look for loans? Or should I just save up (that will take a lot of months) to buy a car in cash? Please help!

If it helps, I'm 19 years old, I live by myself, and I really don't earn too much. $22,080 annually (plus the weekly 8-hour OT I always do) without taxes.

[Anonymous]

Based on your question..all I can say is budget, budget, budget. Your too young to have alot of debt. I had to learn the hard way. Just save every penny and before you know it you'll have enough money to get a car at the auction.

[Anonymous]

You shouldn't have too much trouble getting approved based on the score (interest will be higher tho), but your income may make it harder.  That's not factored into your FICO score, but it's factored into the decision from the car dealer.  It will certainly be hard to get a personal loan.  Since you're young, you'll probably be encouraged to get a co-signor.  But if you're anything like me when I was shopping, you're sick of hearing that when you've considered it and, for whatever reason, may not be an option. 

I don't recommend getting locked into a high payment or taking on debt that will cripple you, but if you can find a dealer that will work with you and give you a loan on a lower cost newer car (actually easier than the older ones, since they're worth something longer), just shop around to find the best rate you can find (even if it's the best bad rate).  If they're going to screw you over, at least have your eyes open to what's going on, knowing that you'll eat it for now while you build your credit.  Good luck!

[cgmiller63]

You could try a credit union.  They are usually more forgiving and have the best rates.  CCCU is a good onehttp://www.mycccu.com/personal/ .  I'd give them a call.

[Anonymous]

To add to the previous post, in my (short-lived, but insightful) experience doing some work for a dealership, most major manufacturers will have a vehicle they gear toward drivers in your situation.  The Ford dealership at that time offered the Escort ZX2, a sporty but economical car that was usually easier to get folks with newer credit and/or lower incomes into.  A used car is much more difficult, as the banks see the decreased value as a liability should they ever have to repossess it.

I should add that even finance managers of these places are either not very bright or not willing to give up trade secrets to new folks (I would suspect both), so I never found out exactly why or how this worked, but would imagine it had to do with pricing, as they're usually lower ticket vehicles.  But somehow they made it work - the very skilled there could take someone dead set on a used Expedition or Mustang (a very profitable commision for a salesperson) only to find out when they go to finance that their credit is shot, new, or they don't have a very good income, and they could turn them to the ZX2 and have them driving it off of the lot.   

My experience was with Ford (who I believe now use the Focus in a similar capacity), but shop around - Chevy and Dodge have similar programs from what I'm told.  Good luck!

Message Edited by OBXFrank on 09-18-2007 02:55 AM