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Smart Shopper Credit Scores and Vehicle Financing
935 messages, Last post on Jul 28, 2009 at 1:12 PM
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I received approval for a Cap One Blank Check car loan for up to 18k. My equifax is 645. I suspect my experian is probably around 10 points lower, and trans u about 20 points higher based on what they were when I checked them a few months ago. The finance rates are: 2009 - 12.7 2008 - 14.7 06-07 - 15.45 02-05 - 16.7 The car I want is around 12-14k, and 04 or an 05, so I'm stuck in the 16.7 finance rate for a 60 month loan. I'll probably pay it off in 30 months, but I wanted the longer term "just in case". Does that seem high? Can I do better elsewhere? I know my credit is not great, but I have no new bad credit in the last four years. My only blemish is a little medical collection from years ago and a four year old 5000 collection in dispute. I have no late payments or judgements. I have six credit cards with under 40% utilization, with total debt on the cards about 2500. My income is 6k per month. I bought a car 2.5 years ago and paid it off six months ago and that's on my credit report. Would I do better going through my credit union, bank, dealer, or another source? I just don't know if the 16.7 finance rate is common for my credit score or has more to do with the fact I'm buying 5 year old car, or that I'm asking for a 60 month loan. Thanks for any help, I don't know much about car financing.
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Replying to: lyndacarter (Jun 29, 2009 9:51 pm) Looking at Capital One auto financing website, their used car rates start at 5.99% for 5 year car loans. So 16.7% is pretty high and I would never finance $12k-$14k at that rate for 5 years. My guess is your credit score and/or "debt to income" ratio is hurting you in this case. I would suggest waiting to purchase a car and focusing on knocking out that credit card debt first. If your total credit card debt is only $2500, it may be possible to eliminate those in 2 months with what you are making. You will see your credit score go up simply because you will be showing more available credit. At the same time, get that collection resolved. That is killing your credit score. If the total car loan (car plus tax, tag, fees) is $14,000, your monthly payments would be $346. Since you plan to pay it off early, you probably have some extra cash available each month. Apply what you have budgeted for the car payment and the extra cash and focus that money on your credit cards. 6 credit cards with a total debt of $2500 is about $425 per card. I'm sure a couple are higher and others lower. Start with the lowest card(s); pay it off and move to the next one. heck you may be able to pay off 2-4 cards in one month depending on the balance. Don't forget that is extra money you have next month because you don't have to send money to the CC companies. If I were that close to being free of credit card debt, i would make that my priority. And put the car purchase on the back burner for a few months. Tons of used cars out there. No sense in you overpaying on the interest rate when this can be resolved in few months. Also try your local bank or credit union. They see your regular deposits and withdrawals. Also most offer "interest rate discounts" with direct payment from your account. i was just approved for a used car loan 3 weeks ago, 4.99% with auto pay (4 years). This is just a layman's opinion. Take from it what you like.
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Replying to: lyndacarter (Jun 29, 2009 9:51 pm) In your case, I would focus on getting as new a car as possible, even if it isn't what you really want and clean up your bureau. Deal w/ the medical collection and the $5000 collection. Those are killing you.
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Replying to: volvomax (Jun 30, 2009 7:43 am) Too many times people will let their credit slide to the dumps because of a dispute. Even if maybe sometime in the future you'll win the case, you'll save $5000, but you'll pay way more than that in higher interest costs over time because of the low score that the $5000 collection created. I'd go for something as new as possible as cheap as possible, until you get your score to over 700. Then go all out and buy yourself a treat of a car at a low interest rate you deserve. What car are you looking at by the way? |
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Replying to: dtownfb (Jun 30, 2009 6:11 am) Better advice is to start with the card(s) charging the highest interest rate. |
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Thanks all, paying off the cards will be easy but my only concern with doing that is that a lot of people are having their cards cancelled once they're paid off, especially if they have "fair" or "poor" credit, so I was concerned with having them closed out. I know my cc from the credit union won't cancel me, but what about discover, cap 1, and hsbc? I don't need the cards, but I like having them and would hate for them to be cancelled. That was the only reason I was keeping a balance on them, but I do pay them off every couple of months and just use them for gas, groceries, eating out, cable bill, power bill, phone bill, etc, so that represents most of the balance on them. I rent right now, $1500/mo. I'll try paying them off and see if my score jumps. I also have a current student loan with $7800 balance. |
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Replying to: grandtotal (Jun 30, 2009 10:19 am) Can't you tell I listen to Dave Ramsey. 
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Replying to: dtownfb (Jun 30, 2009 7:43 pm) If someone can change their lifestyle and spending habits that have caused tens of thousands of dollars in problems... then, paying an extra few hundred in interest over the next couple of years will be a minor problem.. I sometimes wonder why I don't have more money, when I think of the dozens of decisions I make every day, just to save a dollar, or a quarter, or even a nickel! Then, the credit card bill comes in...  I had a lot more control over things, when I was single..
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Replying to: lyndacarter (Jun 30, 2009 7:37 pm) Then why keep them. I've had one credit card for over 40 years and I never needed another. Last time I checked my credit score was 791. Try Googling "Dave Ramsey". Guy has a pretty good plan to get out of debt. EDIT: I see someone already beat me to that one. BTW, if you do get rid of a few cards, keep the oldest one. That will have the best impact on credit. Also lyndacarter I just have to say, I loved you in 'Wonder Woman'. 
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Replying to: kyfdx (Jul 01, 2009 3:25 am) i think the OP should be fine if she cleans up those collections. |
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