Follow up on getting a car loan - big bank or specialty lender?

[Bamaguy]

I have a friend willing to co-sign a loan for me.  I am looking at the $12-$15k range for the loan.  I don't want to do too many hard pulls, so I am going to try to get pre-approved.  So, my question is should I try to get pre-approved from my personal bank (Wells Fargo) or go with one of the specialty lenders like CarFinance.com or Auto Credit Express?  

[MarvBear]

You might complicate matters if the co-applicant does not reside at the same address. Why do you think you should have a co-applicant?

Sent from my SM-P580 using Tapatalk

[cv91915]

13 hours ago, Bamaguy said:

I have a friend willing to co-sign a loan for me.  I am looking at the $12-$15k range for the loan.  I don't want to do too many hard pulls, so I am going to try to get pre-approved.  So, my question is should I try to get pre-approved from my personal bank (Wells Fargo) or go with one of the specialty lenders like CarFinance.com or Auto Credit Express?  

Don't let the irrational fear of inquiries drive your decisions. 

 

https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries

 

Your one and only purpose is to get the best rate and terms you can.  

 

I would advise your friend to reconsider co-signing, and just give you the money (and hope you repay it).  I would rather donate a kidney to someone than co-sign a loan.

[CTSoxFan]

1 hour ago, cv91915 said:

Don't let the irrational fear of inquiries drive your decisions. 

 

https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries

 

Your one and only purpose is to get the best rate and terms you can.  

 

I would advise your friend to reconsider co-signing, and just give you the money (and hope you repay it).  I would rather donate a kidney to someone than co-sign a loan.

THIS!

 

Since you think you need a co-signer, you must have some credit issues.  As our resident bear has always suggested, when you have credit issues you're much better off going to the dealership, picking a car and letting him/her try to arrange financing for you.  They have contacts with the bank and can fight on your behalf.  You may not even need a co-signer which would be a win-win (especially for your friend who is considering co-signing).

[Bamaguy]

There are two primary reasons why I need a co-signor.  

 

First, my TU score is 617, however, with both Experian and Equifax I have no score.  This is because I haven't had any credit accounts (except for one co-signed car loan from 2013 to 2015) since 2011 when I had a foreclosure and a repossession.  Just a bit earlier this year those two things came off my credit report.  The reason cited for no score on EX and EQ is lack of credit history which I understand is as bad or worse as a low score.

 

Second, I am the CEO of a start-up company.  We are pre-revenue.  I have been paid as a consultant (1099) for several years.  There have been breaks in getting paid when we had to raise more money.  It has been pretty steady for the last 15 months or so, but there was a six month break in my income last year earlier in the year.  As such, I don't have the typical "pay stub" that lenders love to see. 

 

For those reasons, I believe I will need a co-signor, but I am completely open to - and appreciative of - the expertise on this Forum.   Let me know your thoughts again, please, in light of this info.  Thank you!

[MarvBear]

Quote

There are two primary reasons why I need a co-signor.  

That's cause you think like a typical consumer.   You don't think like someone from the auto business.  You said you have one paid off car loan still reporting if I read your post correctly.  That's enough in the right hands to land a new loan.

[CTSoxFan]

Listen to Marv - he has been working in auto F&I for a long time...when he started his fur was brown!

[Bamaguy]

OK.  Thanks again for the info, gents.  Here is the latest.  My buddy, rather than co-sign, is providing me some cash (it's actually a share purchase of our company stock).  I will use that cash as a down payment and it should amount to about 50% down payment.  I will ask the car dealer to find me a loan that doesn't require a co-sign, and even if the rate is high, I should only be financing about $8k ro $9k.  Wish me luck!  I will report back my results.

[MarvBear]

That would be much better IMO.   Usually, I can get POI waived with a substantial downpayment.

[Bamaguy]

So, just for my clarity, POI is proof of income?  

[IndyPoolPlayer]

19 minutes ago, Bamaguy said:

So, just for my clarity, POI is proof of income?  

Yes

[Miss Jay]

Yes

[MarvBear]

Since we are close to the end of the year, I should mention that POI Proof of Income may require more documentation for the 1st quarter of the new year,   Because firms payroll practices vary your first paycheck stub of the year may not be reflective of your actual end of current year for verification purposes.   Just For your information tip.

[Bamaguy]

Quote

 

@Velvethammer - thanks for the heads up.  I will bring with me my contract extension letter.  It looks like I will only be able to put down about 30% on $15,000.  I hope that is enough to get the loan done.

 

One more thing - I have been told that with my credit situation I will have better luck at a dedicated used car dealership as opposed to a new car dealer selling trade-ins, etc.  Is this true? 

 

New vehicle franchises have more pull.  They have more available lenders. And probably better talent.  30% as a down payment on a 15,000.00 vehicle should be sufficient.

[MarvBear]

Sorry I did not mean to edit your post, just to quote it. And answer.   I accidently answered inside your post.    Not enough coffee this morning!

[Bamaguy]

Success!!  I am happy to report that, thanks to the sage advice from the members on this board, I now have my first car loan in eight years!  No co-signor.  Sure the rate is ridiculously high, but I made a big downpayment ($5,000 on a $14,900 vehicle) and no POI was required.  

 

I bought a used MDX at the local Acura dealer and we got the deal done in just over an hour.  They offered the advice that I should get a good 4-6 months of steady payments under my belt before I think about potentially trying to refinance at a lower rate.  

 

Thank you all very, very much for the guidance and support.  I can't even believe I got it done!

[centex]

1) don't confine yourself to minimum payments...make larger principal payments where possible to reduce the amount you get gouged for the interest

 

2) when you refi, do NOT extend the term.  Too often, people pay on a five-year (example) note for a year and then turn around and re-fi for a five-year term.  This is part of why SOME are never out from under a car note!  Once re-fi'ed, continue to pay as much as possible each month to clear the note quickly. 

 

I am hoping that with under $11K being financed, you kept this to less than a three-year note.  With the issues in constant income, the shorter a term, the better off you will be.

[MarvBear]

congrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrats!!!!!!!!!!!!!!!!!!!!!