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Soon I will be car shopping, and I was wondering what my chances are of obtaining a loan:
FICO (Transunion) 662.
Chapter 7 (filed 4 years ago). No other negative marks.
Income $1500/mo (total, including tips)
I know my income is low, but so is my debt. I don't pay rent (fiancee pays all household bills). I have one credit card with a $50 min payment, and a $90 student loan payment. That's it. My income comes from working part time, but half of that figure does not show up on pay stubs, as it is from tips. It is reflected on my bank statements though. Is that sufficient? My fiancee makes $110k/yr, but his credit is atrocious, so I think it would only hurt my chances of getting a loan if I brought him into it. I have $4000 in cash to use as a down payment. I am looking for something in the 10-15k range. Oh, also, I have paid off 2 auto loans in the past, so my fico might actually be a little higher than 662 if the lender uses a formula that looks at that as a factor (I've heard some do). Any insight or advice? Thanks!
Soon I will be car shopping, and I was wondering what my chances are of obtaining a loan:
FICO (Transunion) 662.
Chapter 7 (filed 4 years ago). No other negative marks.
Income $1500/mo (total, including tips)
I know my income is low, but so is my debt. I don't pay rent (fiancee pays all household bills). I have one credit card with a $50 min payment, and a $90 student loan payment. That's it. My income comes from working part time, but half of that figure does not show up on pay stubs, as it is from tips. It is reflected on my bank statements though. Is that sufficient? My fiancee makes $110k/yr, but his credit is atrocious, so I think it would only hurt my chances of getting a loan if I brought him into it. I have $4000 in cash to use as a down payment. I am looking for something in the 10-15k range. Oh, also, I have paid off 2 auto loans in the past, so my fico might actually be a little higher than 662 if the lender uses a formula that looks at that as a factor (I've heard some do). Any insight or advice? Thanks!
Can you recommend a good (reputable) finance company online to apply with? I thought about doing that, but I worry about my personal info being sold, and possible dings to my credit from inquiries. I live in California, if that helps.
Can you recommend a good (reputable) finance company online to apply with? I thought about doing that, but I worry about my personal info being sold, and possible dings to my credit from inquiries. I live in California, if that helps.
663 is designated as a "fair" credit rating. Most lenders require a minimum of "good" and many require "excellent" ratings. There are lenders at all levels of credit, but at fair, you will pay a lot for the credit and that amount you can borrow will be limited. You pay for the money both in higher interest and sometimes massive origination fees.
You income level is not so critical because they will look at our expenses and approve only as much of a loan as you can afford. At $1500 a month income, unless you live rent free in your mother's basement, you will not get approved for much of a loan. However since you have a recent bankruptcy and cannot file again, there are lenders who will provide high interest/high fee loans. Keep in mind, the interest and fees will undoubtedly total more than the amount of the loan. So, if you are able to borrow another $3,500, you will probably get about $2,800 on closing and after making payments for 7 years you will have paid $7,000 or more for that $2,800.
Realistically, you are not terribly likely to get approved for a loan in an amount that is enough to buy a substantially better vehicle than you will get for $4,000, especially if you are forced to go to a dealer to get the loan. If you go to a used vehicle dealership, you will pay at least $2,000 more for the vehicle than you can negotiate for a direct private purchase. The dealership must get money to pay for the advertisements, buildings, insurance, theft, salespeople, profit, etc. They pay for that by charging you more for a vehicle. A private seller has none of those expenses. they probably just put a free advertisement on Craigslist. Thus, you may find you are taking out a loan and paying for years only to pay the dealership's mark up. In other words, you may get a better car for the money without a loan. You can get financing for a private purchase, but it is difficult. Especially when you are a credit risk.
If you want to buy a new or nearly new vehicle, you are not likely to be able to do so without your boyfriend or a parent co-signing the loan.
Oh and sorry, the good reputable lenders do not lend to people with fair credit. You will have to deal with a marginal to shady lender. Just be certain you fully understand all of the fees that will be charged as well as the interest. And, do not give anyone cash up front to get you the loan.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Join a credit union. Here we have two, BECU and Puget Sound open to all, plus I have one at work. They offer more personal attention to loans and lower rates. In our case when we bought a 2014 ($34k loan) the rate was about half of what the dealership wanted at about 3%. They will still not approve it for more than you can afford based on your income, however, and that means you will probably be limited to a used vehicle with 70k miles or more, they are not likely to go as high on the loan as $11,000. Some local dealers advertise that they will approve credit for anyone proving they make $250/week but the interest rates are high and the term long. You don't want a 5-6 year loan on a car that won't last that long.
The rate you'd get is almost insignificant. I say that because at your combined income, which is about what ours is, we are putting away $5k a month in savings.
So, if you need a car now, buy one, even if he needs to co-sign. Then pay it off. You don't HAVE to take the entire loan term to pay it off...
Example, buy car with a $15k loan, $18k car + purchase fees (total $19k) using your $4k down, you'd pay under $500 in interest with payments of $1250 a month at 6%. Incredibly easy to handle for folks with six figure income...and in the big scheme of things, the interest is peanuts.
If you don't need a car now, just save for 6-12 months and buy a car with cash.
Used cars are a gamble IMO and with prices the way they are, they simply don't make sense. If you plan to keep the car for the long term, buck up and purchase new. You will have no problems buying an inexpensive car (sub-$20k) and paying it off quickly.
Where people get into trouble is doing like what the poster above said, taking 5, 6, 7 years to pay off the loan.
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