Jump to content

Gumby79

1 year post BK w/ 1 year of perfect auto credit, odds of special APR on a CPO Honda or Toyota?

Recommended Posts

My S/O will be 1 year discharged from a CH7 BK that included a car lease through BMW Financial.  Immediately after discharge, she was able to finance a car through Carvana (Bridgecrest Financial) albeit at a high rate (17.9%).  She can break dead even trading that car in a slightly newer CPO car and is looking at 1-2 year old top trim Toyota Camrys and Honda Accords.  She will have a very significant amount of cash to put down ($10-$15K depending on a few things) so she will only finance $10K - $15K total Out The Door.  Her actual FICO scores are 625-640 depending on the bureau and aside form some student loans her only active credit since the discharge is the auto loan I mentioned with around a $14K balance (that will be paid off prior to her getting another car so no negative equity) and two starter cards with low limits but are PIF a few days before the due/reporting date each month.  

I know she can be approved with that much up front cash at a number of banks, but the Honda and Toyota CPO programs are currently running APR specials of 0.9% - 1.9% for up to 60 months for qualified buyers.  FWIW, she plans to finance a total of $10-$15K for 36 or 48 months at the longest.  Her income is around $40K but has no other significant debt/outgo.  Is there a minimum threshold FICO score she'll need to get the low rate CPO financing or do they have a hard and fast rule that you can't get that APR only 1 year post CH7 discharge?  Thanks for the help in advance!

Share this post


Link to post
Share on other sites

Welcome to CB

 

American Honda Finance is so heavily automated, your SO, once the application has been submitted, before you can refresh the screen the decision is generated.  If it ever sits there and goes into a holding queue, it may be 50/50.  AFAIK, there are no hard and fast rules with the question you ask. I was never successful in getting them to do a rate shave nor a tier bump. 

 

If you are in the southeastern United States then the arm of the distributorship can be bullied by someone like me.   They also bully back.  In the South it is World Omni or Southeast Toyota Finance or whatever name they has now assumed to duck litigation.

 

In any case the dealer cannot mark up subvented rates.  

 

As my opinion only, I would think AHF would be more amenable to the loan application from your SO.

 

 

Share this post


Link to post
Share on other sites

welcome to CB!

 

For those "best" rates IIRC Honda wants a 720 but it might be lower now.

 

What is wrong with driving the soon to be paid off car until it dies while she rebuilds? Even if the new loan is only 15k that is a significant amount relative her income.

Share this post


Link to post
Share on other sites
13 hours ago, Gumby79 said:

She can break dead even trading that car in a slightly newer CPO car and is looking at 1-2 year old top trim Toyota Camrys and Honda Accords.  She will have a very significant amount of cash to put down ($10-$15K depending on a few things) so she will only finance $10K - $15K total Out The Door.

How are you defining "dead even"?  I'm hoping you don't mean that her monthly payment will be the same as it is now after kicking in 10-15k in cash.  :) 

 

Even if she can do the trade with nothing out of pocket, she would be liquidating current equity and using it to pay transactional costs (sales tax, dealer doc fee, etc.).  

 

Also, if she's trading up to a more expensive vehicle she'll be losing more in depreciation every month going forward.  

 

Has she tried refinancing the current auto loan, perhaps with DCU?  

 

 

Share this post


Link to post
Share on other sites

Cannot speak to Honda and BK (or any company and BK), but the advertised cheap money is generally Tier 1 and a score that is described will not generally ever even come close to knocking on the door of top tier levels...

 

her best bet is very likely to line up financing through her bank and be set to go in with a check in hand...that takes financing off of the table as the negotiation point.  And for financing of no more than the claimed $10-15K, she should be approaching her bank to get the loan for no more than two years.  With next to no other debt, tossing $800-$1K at the note each month should NOT be a problem...

Share this post


Link to post
Share on other sites

When I went to finance a new Civic in 2013, with 20% down, I was 3 years post discharge, with a 668 score, and Honda said no, due to the BK.  Not no to the special rate, but just no.  

Share this post


Link to post
Share on other sites
On 3/10/2020 at 4:22 PM, MarvBear said:

Welcome to CB

 

American Honda Finance is so heavily automated, your SO, once the application has been submitted, before you can refresh the screen the decision is generated.  If it ever sits there and goes into a holding queue, it may be 50/50.  AFAIK, there are no hard and fast rules with the question you ask. I was never successful in getting them to do a rate shave nor a tier bump. 

 

If you are in the southeastern United States then the arm of the distributorship can be bullied by someone like me.   They also bully back.  In the South it is World Omni or Southeast Toyota Finance or whatever name they has now assumed to duck litigation.

 

In any case the dealer cannot mark up subvented rates.  

 

As my opinion only, I would think AHF would be more amenable to the loan application from your SO.

 

 

Thanks, Marv!  I've been lurking here for a while now reading up on the best route for her (and by extension, us) to take following her discharge.  I won't go into all of the details but the situation behind her BK was complicated and we've been fortunate enough to encounter a ton of good luck professionally, personally, and financially after that situation.  Some hard lessons were learned as we used to be the couple that leased $50-$60K cars every year rolling over all of the negative just because the monthly lease payments were relatively affordable given our combined income.  Never again....

As for why trading after a year, well, the car she financed through Carvana was not one we really wanted but it was decent and it was the only place that approved her literally 1 day after discharge so it was a snap decision that we knew we could readdress later down the road.  The 'break even' comment is the auction wholesale price of the car now being within a few hundred bucks of what she owes.  

Truth be told, combined, we could afford not to finance another car in that price range of $25-30K total but want to finance a small amount to continue the credit rebuilding process.  The plan, if we finance $10-$15K is to pay $1000 per month to get it paid off within 1-1.5 years.  I realize that paying such large payments means that if her credit union approves her for 8.9% or thereabouts vs Honda or Toyota approving her at 1-2%, it won't be thousands of dollars in interest that the original loan would be.  It just would be "nice" to get the special APR given the equity she'll have.  

Share this post


Link to post
Share on other sites

I still think either Toyota or Honda will finance your SO, even with a previous BK.   A 15K down payment is the ticket to approval, but not necessarily the ticket to any particular APR.

Share this post


Link to post
Share on other sites
3 hours ago, MarvBear said:

I still think either Toyota or Honda will finance your SO, even with a previous BK.   A 15K down payment is the ticket to approval, but not necessarily the ticket to any particular APR.

Thanks again, Marv.  I think we'll give it a try and tell the dealership that if she doesn't qualify for the special rate then we'll just bring in a cashiers check for the loan difference from the credit union.  

Share this post


Link to post
Share on other sites
1 hour ago, Gumby79 said:

Thanks again, Marv.  I think we'll give it a try and tell the dealership that if she doesn't qualify for the special rate then we'll just bring in a cashiers check for the loan difference from the credit union.  

Good approach 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.





  • Today's Birthdays

    No users celebrating today.
  • Member Statistics

    • Total Members
      178,430
    • Most Online
      2,046

    Newest Member
    emcibucuresti
    Joined

About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines