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#999 of 1024 Re: Auto Loan advice requested [joe350]
Sep 27, 2011 (2:19 pm)
Did you find out why you were rejected? Did you try your bank or credit union? can you put additional cash toward the purchase of the car and lower the loan amount? Why not the dealer?
Here's the section on auto loans from Edmunds: http://www.edmunds.com/car-loan/
If you got rejected by Capital One, my fear is you are heading toward a car loan with a high interest rate. Not sure an online auto loan broker is the way to go.
#1000 of 1024 Re: Auto Loan advice requested [dtownfb]
Sep 27, 2011 (2:44 pm)
Agreed. You need to find out why the loan app was rejected. My guess would be your debt-to-income ratio or you have a high amount of unused credit (empty credit cards with high credit limits).
My wife was rejected when she applied for a $21K auto loan last week. Our guess is because some things like our mortgage are in both names (though I pay it) as she has minimal debt otherwise. My income is close to 3x hers but she has a higher credit rating (by 10 points; both are comfortably above 750). Still, when we changed the loan app to joint it was approved.
Your credit score is a factor but nowadays the banks and finance companies are taking a closer look at your overall financial picture. And, to be honest, sometimes the factors they use to decide on creditworthiness aren't reasonable.
Also, the credit card thing. If you have a lot of available credit you're basically screwed. They won't give you a loan because there's risk of you racking up other debt & not being able to pay it. But, if you cancelled the high availability credit card to eliminate the risk your credit score is dinged as your available credit-to-debt ratio just got worse. You literally can't win, at least short term.
#1001 of 1024 Re: Auto Loan advice requested [fushigi]
Sep 27, 2011 (3:37 pm)
Thanks a lot for your time and advice. It was very helpful.
#1002 of 1024 Re: Auto Loan advice requested [dtownfb]
Sep 27, 2011 (3:39 pm)
Thanks very much.
#1003 of 1024 Re: Auto Loan advice requested [joe350]
Sep 27, 2011 (5:27 pm)
you're welcome. My last auto loan, June 2009, for my 2006 Camry was through my credit union. Everything was done online and approval was within 2 mnutes. Nice thing about that is payment is done electronically through your account.
A financial institution that knows you is your best bet, if you don't want to deal with the dealership.
#1004 of 1024 Re: Auto Loan advice requested [joe350]
Sep 27, 2011 (10:25 pm)
Well there's a few factors that go into a lender's decision...
1) Score. It's not the score itself. I have seen people who were barely 600s that got tier 1+ rates (Rare, but it can happen with generally very wealthy clients with lots of accounts) and I have seen 700+s that need cosigners.
It's not at all uncommon for us to see a college student with a 700+ based on 3 small limit credit cards. I've also seen people who were 800+s with recent 30 and 60 day lates bringing them down 100 points, this scares lenders.
2) The collateral. Few banks will loan money on a car older than an 03 or an 04, or with more than, say, 80k miles.
3) Your debt to income ratio. If you make $50k a year and have $2k down, good luck buying that new BMW 7 series even if you are an 800.
4) Equity. We recently had a customer who was in the high 700s who we couldn't get approved. Why? $7500 negative equity in their trade-in and $1500 down on a new Elantra GLS. No bank is going to loan $50,000 on a $30,000 car, no matter how good your credit is.
And there's other red flags, like an application that seems "odd" like someone who has always leased cheap cars suddenly looking to buy a new Escalade, or someone from Texas looking to buy a car in Ohio, etc.
#1005 of 1024 Re: Auto Loan advice requested [im_brentwood]
by Mr_Shiftright HOST
Sep 28, 2011 (8:13 am)
If you lived in Texas right now, wouldn't YOU want to go to Ohio?
It's ironic in a way to see lending institutions suddenly transforming themselves from their not too distant behavior akin to pirates with eye patches or dance hall girls with red dresses, into proper and sober Victorian businesspeople. You gotta laugh.
#1006 of 1024 Re: Auto Loan advice requested [Mr_Shiftright]
Sep 28, 2011 (8:54 am)
Oh it's actually funny...
There's one bank that's rather liberal in their lending practices... with regards to advance and term, but their rates are high.
Piracy ain't dead yet.
#1007 of 1024 Re: Credit denied after taken possession [timmy15]
Dec 29, 2011 (10:56 am)
This smelled bad from the beginning, my main question was: Why didn't you have FINAL approval before you left? I have never left without final approval on a car finance. I usually have pre-approved loans from USAA and let the dealers try to match the rate and term, but if they do, its a final approval, not pending.
#1008 of 1024 Re: Advertised financing rates - negotiable? [knight_ru]
Dec 29, 2011 (11:01 am)
Sometimes your preferred bank / CU can get better, sometimes not. Back in March the best i could do was 3.4% from USAA on a 2008 for approx 16K. The dealer could get it a little lower (approx 2.9) but the total dollar difference over the two years term was too low for me to change my mind.
This past Nov, USAA was quoting the same 3.4% but on a 2009 for 33K for 3 years (max term at that rate) but GM's Ally (new name for old GMAC) offered 0.9% up to 3 yrs, same 33K amount. I couldn't pass that up. It took FIVE SECONDS for FINAL approval, and i drove of that night.