Applying for an auto loan- opinions needed !

Giantsfan01 wrote: ↑First off I hope everyone had a great weekend ! I am just looking for some opinions and thoughts on an upcoming auto loan that I am applying for, so hoping some industry guys that are always helpful can chime in (mikeymike) along with anyone that has had a similar experience. Over the past year I have been trying to turn my credit around and have successfully raised it from 430ish last august to 659 EQ right now and 730 TU. I have two trade lines reporting, one is very new was just opened about a month ago. My second trade line is my Capital one previously secured card, this Capital one card is what is currently bringing my score down as it is reporting 250 out of 300 dollar utilization. The card was unsecured about 3 weeks ago and limit raised to 2500 but wont report for another week or so. I have very stable income and absolutely no debt or collections on my account, my last paid collection dropped off on the first of this month. The vehicle I am looking at is a used 2012, costing roughly 30k but I am putting 5k down. Anyone know what my chances of being approved would be, I have a co-signer if needed but I am trying to avoid using one. I know my score is going to raise once the capital one reports again but I don't think I will have time to wait. Thanks in advanced for any suggestions or opinions !

Well, next time try to put a line between paragraphs. It's so hard to read... Another thing, you are looking at a vehicle that is $30K and it's 2012? What is the mileage on that? To me, the price seems a bit high for a 2012 model. What is the exact model and mileage?

Judging by your post, I would not recommend getting 30K used car even with a co-signer and even if the bank approves the loan. (there will be some dealers who are trying to convince you to get a loan with utterly high interest rate. By all means, avoid those)

I say find another car with $10~15K price tag and put down 5K. I am sure you will be able to find a bank that will give you a loan.

Its a 2012 Ford F150 with 30k on it, I have been looking for a truck for awhile and financially I feel that I am ready. Me and my wife already have our own house, combined household income is 120k. Current debt is 15k for her car and roughly 7k on MBNA 0% card, we also have a good chunk in RRSP's and some savings. If I cannot get the rate that the dealership offers of 5.99% then I will most likely pass for now.

without reading your whole post - auto loans were never a financial sensible decision.

Generally speaking though, as long as you're 650+ with a decent credit history you should be OK. Beyond that, they're more concerned about your debt load (not exceeding 1/3 of your income- and your credit card limits are factored in with the worst case scenario that you max them). Reading your background you should be fine.

FirstGear wrote: ↑without reading your whole post - auto loans were never a financial sensible decision.

Generally speaking though, as long as you're 650+ with a decent credit history you should be OK. Beyond that, they're more concerned about your debt load (not exceeding 1/3 of your income- and your credit card limits are factored in with the worst case scenario that you max them). Reading your background you should be fine.

Appreciate the response, thank you !

FirstGear wrote: ↑without reading your whole post - auto loans were never a financial sensible decision.

Generally speaking though, as long as you're 650+ with a decent credit history you should be OK. Beyond that, they're more concerned about your debt load (not exceeding 1/3 of your income- and your credit card limits are factored in with the worst case scenario that you max them). Reading your background you should be fine.

Appreciate the response, thank you !

Do you need a truck right away? You said you two are making over 120K. Can you save up and buy it cash upfront? So much saving in that way.

Giantsfan01 wrote: ↑Its a 2012 Ford F150 with 30k on it, I have been looking for a truck for awhile and financially I feel that I am ready. Me and my wife already have our own house,combined household income is 120k. Current debt is 15k for her car and roughly 7k on MBNA 0% card, we also have a good chunk in RRSP's and some savings. If I cannot get the rate that the dealership offers of 5.99% then I will most likely pass for now.

You have your own house, or you have a mortgage? Very big difference between the two.

Pay off one car at least before even contemplating getting the 2nd car. Having 40K in car loans + 7K credit card debt is insane, let alone if you have a mortgage. What if one of you lose their job (very possible in the current economy)?

Pay off some of this stuff first.

Sorry we have a mortgage, we owe 150k and value is roughly 280k. I also forgot to mention my wifes car payment is covered by her work because she is required to travel.

The only debt we have besides her owing 15k on her car is our 7k mbna 0% card which is no interest until next May and we currently have savings to pay it off at anytime.

Giantsfan01 wrote: ↑The only debt we have besides her owing 15k on her car is our 7k mbna 0% card which is no interest until next May and we currently have savings to pay it off at anytime.

What do you drive now and what do your monthly expenses look like?

Giantsfan01 wrote: ↑First off I hope everyone had a great weekend ! I am just looking for some opinions and thoughts on an upcoming auto loan that I am applying for, so hoping some industry guys that are always helpful can chime in (mikeymike) along with anyone that has had a similar experience.

Over the past year I have been trying to turn my credit around and have successfully raised it from 430ish last august to 659 EQ right now and 730 TU. I have two trade lines reporting, one is very new was just opened about a month ago. My second trade line is my Capital one previously secured card, this Capital one card is what is currently bringing my score down as it is reporting 250 out of 300 dollar utilization.

The card was unsecured about 3 weeks ago and limit raised to 2500 but wont report for another week or so. I have very stable income and absolutely no debt or collections on my account, my last paid collection dropped off on the first of this month. The vehicle I am looking at is a used 2012, costing roughly 30k but I am putting 5k down. Anyone know what my chances of being approved would be, I have a co-signer if needed but I am trying to avoid using one. I know my score is going to raise once the capital one reports again but I don't think I will have time to wait.

Thanks in advanced for any suggestions or opinions !

Hi Giantsfan, got your PM.

Generally for new/used auto there's approx 5 tiers for financing available predicated on a number of qualifiers.
auto-financing-rates-1164414/#post14570999

For your used auto selection a personal line (PLOC) from your main financial institution is usually the best route to go for rate, term length and overall flexibility of loan terms.
Subject to your disclosure you may have a difficult time qualifying. But considering you're a home owner your chances are better than one without.

With the equity you've disclosed a HELOC is also a possibility. I personally would not use a heloc to finance a depreciating asset but many people have. Rates are usually very favorable going this route.

If above both are not feasible the best solution is through the dealer point.
All licensed auto dealers will have a number of referral Fi institutions they can send their paper to.

Franchised dealers have the benefit of utilizing their captive finance divisions plus can market and sell used CPO vehicles which almost always get preferred reduced rates and terms which are usually lower than Cdn banking counterparts.
Independent used auto dealers have the least amount of finance options which are mainly limited to the big Cdn banks auto finance divisions.

If rate is an important factor it should be noted that where you buy your next used auto is key and should be duly observed.


Now, as far as underwriting security, your indicated 5k down would be fine so as long as the vehicle books out properly - LTV risk most certainly accepted.

Other qualifiers will be the capacity to support. Depending on who the FI is you apply at they may peg the entire mortgage on you 'even' though you'll state other income(wifes) is supporting half.
If this is the case a co-jo may be required whether you want it or not. Co-signers are not necessarily always needed for poor credit or lack or credit individuals. Its sometimes a requirement for serviceability and to justify underwriting criteria to keep debt service ratios in line.

Lastly, your credit file. If you can pay down your Cap One card to zero that would be ideal. Whether its 300 limit or 2500 limit, a reported zero utilization is still zero. But of course, that will only show after next reporting cycle update.
Now, unless your CapOne card is over 2 years of age, with only 2 cards your profile will be pegged as new-to-credit. But that's only for the credit products itself. The indicated time on bureau(codes for how long you've been on bureau) will alert any lender that is reviewing your bureau will notice you've had some history yet none are showing. Some may question why you have only new credit and some may not. Most banks are not stupid and will know aged trades we're purged.

In summation, I think your chances are good, mainly due to the fact you have a mortgage.
Credit bureau may be thin but good LTV risk ratio with down.
Total debt service may be a concern if marginal including mortgage. Co-jo if required but probably just for serviceability.

Only hard concern will be rate of finance if failing LOC or HELOC.
Your thin bureau may qualify a rate in the 6-8% range. But buying from a franchised dealer including CPO may qualify for under 4-5% predicated on their incentives.

Wow thanks for the very informative response Mike. It is a very reputable Ford dealership and it is a CPO vehicle, my current capital one balance is sitting below 50 right now and it will report in a week or so. I might just wait the week and see what my score rises to. Really trying to avoid a HELOC because we plan on purchasing a new home in two years.

Some other food for thought that you can keep in your hip pocket.
This is a bit of a mindset and policy qualifying between two lending venues.

When you apply for an auto loan at a mainstream bank 'you' are the only 'one' customer being assessed that can influence(bureau status) a credit decision.
When you apply for an auto loan at a retail auto dealership 'you' are one of 'two' customers. Ultimately your good credit is and will be a deciding factor for acceptance but the franchised dealer(customer number two) is also a big to huge influence for the loan commitment.

Many people fail to secure LOC's at low rates at their own banking institutions but seem to secure 1.9%, 2.9% etc etc at the new car dealers all the time. The dealers lending divisions are always under extreme pressure to assist their retail partners succeed and part of that policy is to lower underwriting protocol and measures.
The likelihood of acceptance is usually compounded when month end is near due to the fact all retail dealers are tied to delivery quotas and mandates.

So you waiting a week or so would probably be more helpful to you than not. Only stating this due to your credit disclosure and probable marginal ranking.

good luck. get that truck!

Update !

My capital one card update this morning on Equifax and my score increased to 682. That's from 430ish last August. This worked out perfect as I was due to apply for financing today and sign the papers for the truck.

This is a large Ford dealership and they were advertising 6.99% on used vehicles. The gentleman in finance wanted to aim for 5.99% and was sending my app to one of the big banks. They told me it would take a couple hours before they heard back and I left the dealership very nervous and hoping for the best.

My sales rep called me about 3 hours later to inform me that I was approved and the bank chose 5.49% instead of 5.99%. I understand some people might think that's still a terrible interest rate but I have very happy with it.

I just wanted to thank everyone for there input and especially Mike. Mike has helped me with his opinion and suggestions since I started rebuilding my credit. Have a great weekend everyone !

Awesome! - enjoy the truck.

Word of advice - BUY THE EXTENDED WARRANTY.


Especially if you have the eco boost engine!

Congrats Giantsfan, good job.