Bad Credit Auto loans?
My fiance's credit score is 575 (ish). He has a mortgage but nothing else currently on his credit. The low score is due to old debt that has since been paid off, student loans, and late mortgage payments. He hasn't had a late payment in more than 6 months now. I have a credit score of about 600 which I have been trying (with no luck) to raise. I currently have a car loan with an awful interest rate, but I have never been late. My credit score is lower due also to old debt that's been settled and student loans. (Both of us are in grad school currently so our student loans are no longer an issue.) We want to finance a new car and we make approx. $111,000 per year with our combined incomes. Will the income be enough to get a good rate on a car loan or should we just hold off until we can save money to buy something out right?
Public Comments
- Auto finance is what I do for a living and income has nothing to do with interest rate. Auto loans are based on the following factors period; 1. Loan to value. 2. Term of loan. 3. Age of vehicle. 4. Miles on vehicle. 5. Down payment. 6. Time on job. 7. Time at residence. 8. Monthly income before taxes. Only used to see how much payment you qualify for. 9. Credit score/profile. 10. Total debt to income ratio. With your scores depending on the loan to value ratio your looking at high interest no matter what you buy.
- The first thing you need to know about car financing is NEVER finance with the dealer unless it is a last resort. The dealer (or your bank) will never be able to match the rates that you could get at a credit union. Not only that, but having financing already when you walk into a dealership puts you in a position of power rather than the other way around. Every car dealer wants to add things to your bill and get extra money from you, but that's a story for another day. :) Don't be afraid to call around. Get your phonebook and start dialing. Each time your credit is pulled your score is lowered, however car financing falls into the same category as mortgage debt. You have 45 days in which to allow as many companies as you wish to pull your credit with no repercussions. Keep this in mind. Unfortunately your combined income alone will not be enough to guarantee you a lower interest rate. Most financing companies (including dealerships) insist that you have held your job for at least 6 months-1 year before extending financing. Unless you are in a dire situation and need the car right this second, hold off on purchasing one. Buying a car in cash is always good, but does not improve your credit rating the way financing a car and then paying it off would. There are many, many ways of improving your credit. If you post a question concerning how to erase your old collections accounts and improve your credit score I am sure many of the experts here would be willing to help you. Improving your credit substantially can also take 6 months-1 year. At this point you should be well prepared both financially and otherwise to go shopping for your new car. Best of luck.
- I also sell vehicles and have sold both new and used and done so for many years. If you are purchasing a new car and everything is current then you may be able to qualify through the finance company of the manufacturer you are purchasing through. Such as GMAC(GM products) or FMCC (ford). You may even qualify through a credit union because of your 600 beacon. The rate may not be what you call great, but it should still be decent especially if you go through a credit union.
- I was a credit analyst for Ford Credit for several years. Credit decisions were based on the the 3 C's. Character (Credit report), Capacity (Debt Ratio, time on job, income) and Collateral (Loan to value ratio, age of car). The first thing we looked at was the credit report because you were responsible for the loan and had to explain why the loan was approved with poor credit. Most credit decisions are made by a computer now. There is always some place that will lend you money but even that is tightening up because of the current mortgage crisis. Watch out for the rate and fees. Most fees after tags and title are pure profit for the dealer. NEVER tell the dealer what payment you can afford. Negotiate the price of the car only.
- Your income looks good so you should get approve with out a problem, try your local bank or check out www.speedyloanapprovals.com they have a really good program
* Some answers may have been provided by Yahoo! Answers.