Recovering poor credit need help in getting auto loan

[Bamaguy]

Hello All!  I am new here and I really need some help.  Back in 2011, I had a foreclosure and a repossession.  Those dropped off my credit reports earlier this year.  Because of those, I haven't been able to get approved for any credit except a car loan with a co-signor (American Credit Acceptance) that I had all good payment history and then paid off in 2015.  I have been driving a lease car from a friend since then, so not in my name and now that friend can no longer provide the lease, so I have to buy a car.  The only other item on my credit reports is a credit card my ex-wife had with my name on it as well that she ended up not paying and settling with them (about $1360).  

 

Just pulled my credit reports.  TU is 617 but both Experian and Equifax has no credit score!  They say it's because I don't have enough credit history, but how can I get any if I can't get a credit card??

 

Anyway, I spoke with Carfinance.com and they use Experian.  If I had a 500 with them, I could get a loan.  

 

I make over $100,000/year but I am self-employed as a consultant, though it is quite regular.  I am looking to borrow between $20k and $25k and I will have $10k to put down.  What is my best approach to go about getting a car loan, please?  I'm really at a loss here, so any help or guidance would be greatly appreciated!

[MarvBear]

Pick a car out at a local dealer and let the dealer go to work for you.

[Zanshiro]

If you have a family member/friend with good credit, you could get added as an AU and likely with a 'no history' get a bump that would put you in the high 600s straightaway if they're not carrying a balance - more with an older card.  But working at a dealership, yes, we get loans for people with limited credit all the time.  A lot depends on what vehicle you're looking to get into also.  Getting into, say, a Ford Fiesta, for example, is much easier than a Lincoln Navigator.  If you're able to wait the month and have the AU ability, it would likely help with the problem pretty easily.

[CTSoxFan]

Here is another route you can go.  Buy a cheaper car in cash for a few thousand dollars.  Nothing extravagant, just a good reliable car.  At the same time, take some of the cash you were going to use as a down payment and open up a couple of secured credit cards, preferably ones that can graduate to unsecured (like Discover, NFCU, BoA to name 3). Give it 12 months of using the cards every month and paying in full when the statement cuts.  In a year, the cards should graduate and you'll get your security deposit back.  Then you can use the security deposits, plus trade in the reliable car you have ben driving as a down payment for the car you want.  You'll also have a much better credit score by that point and will likely qualify for much better financing offers.  Better to take this route then to get into an expensive car now at a very high interest rate and pay thousands of $$ in interest.

 

Just as an example, if you finance $20K (per your post)and get a rate of 15% (it may be even more than this) you'll pay $2,800 in interest in the first year and $8,600 over a 5 year loan.  If you wait and can get a rate of 5% it would be $900 and $2,600 over a 5 year loan...huge impact.

[cv91915]

17 minutes ago, CTSoxFan said:

Here is another route you can go.  Buy a cheaper car in cash for a few thousand dollars.  Nothing extravagant, just a good reliable car.  At the same time, take some of the cash you were going to use as a down payment and open up a couple of secured credit cards, preferably ones that can graduate to unsecured (like Discover, NFCU, BoA to name 3). Give it 12 months of using the cards every month and paying in full when the statement cuts.  In a year, the cards should graduate and you'll get your security deposit back.  Then you can use the security deposits, plus trade in the reliable car you have ben driving as a down payment for the car you want.  You'll also have a much better credit score by that point and will likely qualify for much better financing offers.  Better to take this route then to get into an expensive car now at a very high interest rate and pay thousands of $$ in interest.

 

Just as an example, if you finance $20K (per your post)and get a rate of 15% (it may be even more than this) you'll pay $2,800 in interest in the first year and $8,600 over a 5 year loan.  If you wait and can get a rate of 5% it would be $900 and $2,600 over a 5 year loan...huge impact.

I agree with this suggestion and logic.  

 

Something like an older Lexus RX350 with 100,000 miles on it easily has another 100,000+ miles of life left, and you can pick one up in the low $10,000s.  

 

We made a car purchase decision similar to this about four years ago (with no credit issues and no practical budget constraints).

 

You might even find that you like the idea of not flushing tens of thousands of dollars down the automotive depreciation toilet.  

 

(I'm starting to sound like my father*  😛 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* who made a great living as the owner of a new car dealership.

[IndyPoolPlayer]

8 hours ago, cv91915 said:

who made a great living as the owner of a new car dealership.

Special Finance was probably his most profitable section of the dealership, provided he had reliable lenders available to hang the paper

[Bamaguy]

Thank you all for the input.  It looks like I may be able to borrow a friend's car for a couple of weeks while figuring things out as long as I can get insurance for while I have it.  In the meanwhile, I will also see if anyone would be willing to co-sign on a loan.

 

Last question... Will I have better luck working through a dealer or trying to get a loan approved ahead of time directly with a lender?  Any thoughts on that?

 

 

[MarvBear]

On 11/24/2018 at 5:20 AM, MarvBear said:

Pick a car out at a local dealer and let the dealer go to work for you.

How successful have you been on your own so far?

[CTSoxFan]

4 hours ago, Bamaguy said:

Thank you all for the input.  It looks like I may be able to borrow a friend's car for a couple of weeks while figuring things out as long as I can get insurance for while I have it.  In the meanwhile, I will also see if anyone would be willing to co-sign on a loan.

 

Last question... Will I have better luck working through a dealer or trying to get a loan approved ahead of time directly with a lender?  Any thoughts on that?

 

 

I reiterate I strongly would suggest buying a cheaper car and in a year after building your credit then looking for a new car, however, if you are determined to buy something new and finance it then you are best to go to a dealer and let them work on your behalf.

 

Also, if you find someone to co-sign for you, please direct them to this site so we can tell them what a HORRIBLE idea co-signing is for anyone (not including jointly with a spouse).  This advice goes for you as well.