Purchase Plan

[aspensilver]

Sound advice to be sure. This is what I have been doing. I am worried I won't be offered a loan. I could afford a pretty awful APR, but I would only do so knowing I would refinance in the near future. I just don't want to get all prepared and order the car only to have it arrive and not be able to get a loan.

your credit score is too good for someone not to offer something

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[Nate408]

your credit score is too good for someone not to offer something

664 TransUnion
719 Vantage

I read 664 is "Fair".
The 719 score is almost "Good" but it's on a different scale.

I wonder if the fact that I have minimal history would cause me to get no offers. I appreciate everyone's feedback. Up until about a week ago I thought I was going to have my parents as consigners so I'm all paranoid.

 

[Fox9350]

You'll get a loan, this is America. We live off credit. The rate is the only variable here.

 

[Grimace427]

You'll get a loan, this is America. We live off credit. The rate is the only variable here.

Yeah it sometimes seems easier than it should. I'm in the process of being approved for a home loan and the officer looking at my info is telling me I'm approved for a lot more than I thought possible. Of course still the smart thing is to know your limits and not stretch yourself so thin you fear making those payments.

 

[Wildcat]

What do you mean 720 is not good?

I was in mortgage lending for awhile. Scores from 660-720 are considered okay but not great (unless you were doing an fha loan), and there were rate adjustments at different levels within that range. Definitely not top tier, though. 740+ is considered excellent. 780+ is top tier.

Car financing is a good bit more relaxed in most cases. But as our resident car finance guy pointed out, they look at similar factors: dti, ltv, income, and employment history.


To the OP, if you are thinking of buying a home any time soon, I would hold off on this plan. In the area you're in, you'll pay a lot even for a smaller home. Then you'll have property taxes and homeowners insurance. And depending on your down payment and ltv, you'll have private mortgage insurance, which could be quite high depending how much you finance, and a 720 score won't get you the best base rate on MI.

Believe me, 80k doesn't go as far you think. I've turned down plenty of people making 80k plus who didn't qualify because of too much monthly debt.

If you're renting, that's a different story. I'd still think about it a bit.

 

[Wildcat]

664 TransUnion
719 Vantage

I read 664 is "Fair".
The 719 score is almost "Good" but it's on a different scale.

I wonder if the fact that I have minimal history would cause me to get no offers. I appreciate everyone's feedback. Up until about a week ago I thought I was going to have my parents as consigners so I'm all paranoid.

Minimal open tradelines is most definitely factor in the FICO score calculation and can keep your score lower. Having multiple established accounts (3-4 or more) paid as agreed over a significant length of time is an important factor in determining your ability to take on new debt.

Obviously the most important factor in the calculation is on time payments and lack of derogatory credit history (bankruptcy, collections, etc). Then there's the balances owed. These two are weighted much more significantly than other factors.

Then you have length of credit history, types of accounts, and time accounts have been opened.

If you only have one credit card, I would consider opening another credit card or two. Make sure it's an actual credit card and not some retail store card.

And I would open them a few months apart. Credit card companies pull one or more bureaus (a "hard pull"), and too many inquiries in a short period (excluding mortgage loan inquiries done within 30 days of each other) can adversely affect your score.

Keep some balances on them and then start paying them every month. Be sure to keep the balance below 30% of the credit limit if you can as utilization of credit and the percentage of balance owed to available credit is another factor in the score. Maxing out cards will lower your score. Not a lot, but a few points. And those points could make the difference of one rate tier or another on a loan.

If you have student loans, those are considered installment debt and once you pay those for a little while, it should help your score.


Also, the "Vantage" credit score is not a FICO score. It is a different credit score model with a different range that the bureaus came up with to compete with Fair Isaac. It is commonly seen on consumer purchased credit reports from companies that offer these services (e.g. Credit Karma). There is a big debate as to whether it's a better model, but keep in mind that the industry standard in lending is still the FICO.

 

[Patio208]

I agree my local credit union offered me 30K loan with 2.5 interest rate

I'll throw my vote behind credit unions. When I was just starting out in the world like the OP I had a terrible time getting my 2005 GT financed. Lots of denials and a few ridiculous rates including Ford Credit. My credit union was much more accommodating and offered a rate slightly under 5%.

 

[deeps29]

OP, the scores you have posted are most likely not FICO scores. When going through auto loan or any other credit account, bankers use FICO scores from any one of Transunion, Equifax or Experion. They may look into more than one.

Last year I was in same boat like you and thought starting with an auto loan with interest rate as high as 10% is fine as long as I get to refinance it. But after a year when I look at it, it seems like I have paid nothing towards principal amount. More than half of my monthly payments were going towards the interest money. Your car depreciate its value faster than you payoff your loan. Unluckily I was in an accident not at fault and my car was declared totaled. Luckily loan got paid off and I have to start again. I am not going to make same mistake again. I want a loan definitely under 5% and I am going to make a larger down payment.

Like everyone suggested, go with a credit union. If you don't already have a relationship with a local credit union, start one. Open a credit card account with them. Since you are already planning 20% as down payment, good chance that they will offer you an auto loan under 5%. Keeping credit card balances under 30% is a good way to boost up your scores and keeping them under 10% is even better.

 

[Wildcat]

OP, the scores you have posted are most likely not FICO scores. When going through auto loan or any other credit account, bankers use FICO scores from any one of Transunion, Equifax or Experion. They may look into more than one. .

He said one of them was a Vantage score, so that definitely wasn't a FICO.

MyFico.com, which is run by Fair Isaac, is the only place to get all three FICOs as a consumer. Experian pulled out of their agreement with myfico a few years back, but now they offer it again.

Most lenders, at least in the mortgage business, pull all three bureaus in a merged report. Not sure with car finance. I would imagine the big banks would pull a trimerge, but some credit unions or finance companies may only pull one.

Generally pulling all three is better for the borrower because the middle score is taken and sometimes one bureau might have something inaccurately reported that affects the score. It's a lot easier to crosscheck those kind of potential errors when you have the other two bureaus as a comparison.

 

[Nate408]

He said one of them was a Vantage score, so that definitely wasn't a FICO.

MyFico.com, which is run by Fair Isaac, is the only place to get all three FICOs as a consumer. Experian pulled out of their agreement with myfico a few years back, but now they offer it again.

Most lenders, at least in the mortgage business, pull all three bureaus in a merged report. Not sure with car finance. I would imagine the big banks would pull a trimerge, but some credit unions or finance companies may only pull one.

Generally pulling all three is better for the borrower because the middle score is taken and sometimes one bureau might have something inaccurately reported that affects the score. It's a lot easier to crosscheck those kind of potential errors when you have the other two bureaus as a comparison.

Thanks for all this discussion. I have a 664 FICO.

 

[Nate408]

I'll throw my vote behind credit unions. When I was just starting out in the world like the OP I had a terrible time getting my 2005 GT financed. Lots of denials and a few ridiculous rates including Ford Credit. My credit union was much more accommodating and offered a rate slightly under 5%.

I was looking at getting into a credit union. Since I would likely be buying the car in September / October timeframe, would I have enough history with them to ask for a 25-30k loan in a few months time? How did you work this out with your credit union. Also I've been doing a lot of research regarding refinancing. I get it you shouldn't buy a car at an APR you can't afford because counting on good luck is just asking for trouble. However, my credit will likely be quite good a year from now, and I sure would like to save as much as possible by having a lower rate. How legit / straightforward is it to refinance an auto loan? Is it only for people with good or bad credit? Thanks!

 

[BONESTOCK]

I was looking at getting into a credit union. Since I would likely be buying the car in September / October timeframe, would I have enough history with them to ask for a 25-30k loan in a few months time? How did you work this out with your credit union. Also I've been doing a lot of research regarding refinancing. I get it you shouldn't buy a car at an APR you can't afford because counting on good luck is just asking for trouble. However, my credit will likely be quite good a year from now, and I sure would like to save as much as possible by having a lower rate. How legit / straightforward is it to refinance an auto loan? Is it only for people with good or bad credit? Thanks!

Just refinanced my wifes car. Piece of cake. The bank did all the work....well except for us getting the title and going to the DMV to transfer lien holders. The bank could do that but we didn't feel the need to pay the fee for that.

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