Any advice on a car loan

[Misty1979 0]

Good morning fellow Canadians!

I was hoping someone here might have some advice on how to get financed for a car...mine is on it's last legs (it only starts for me about 50% of the time, sometimes it just shuts off in random places while I'm driving, and no it's not the alternator.) Anywho, because my husband is a pack rat and grows attached to things, we have brought this car to 4 different mechanics and paid 4 different fees adding up to more than $1200 over the past year. Yep...enough for a down payment on a newer more reliable car. I finally have him convinced that we need to ditch this thing, because any day now I'm going to be stuck without transportation to work (he gets a ride with his friend to school everyday, so we only have the one vehicle.)

My problem is much the same as all of you: I hardly have any credit history here in the US, and unforunately, when I first moved down here, I was sick for a while, and ended up racking up $1400 of hospital bills. We were living on pretty much beans and rice during that first year, and could honestly not afford to pay the bill. I kept hearing that hospital bills didn't effect anything credit wise, so stupidly, I ignored the bill for about a year and a half until we could afford to start making payments. Well needless to say, it went into collections, and I've been making small payments on it, until yesterday when I payed off the remaining $1100 in one lump sum.

Long story short, I've applied for a car loan through my bank twice in about 3 months. Both times I've been denied, and it sounded like the hospital bill was alot of the reason, along with a short credit history. I'm scared to apply again, even now that I've paid the bill off because every time someone looks at your credit, your score is lowered so the more I try the worse it gets, but I'm getting pretty desperate here.

Anyone have any tips or advice?

[MrsCat 6]

Not sure if you absolutely need the car for work or not. But if you don't - I have seen a lot of people selling their beaters on Craigslist for above normal price to people who want a car to trade in for cash for clunkers. ie: buy an older car for $1200 and trade it in for $3500 or $4500. That may be a way to come up with some money for the downpayment rather than a worthless trade in.

As for securing a loan, I have absolutely no idea. I am sure someone will have some good advice.

Btw, you look lovely in your profile pic.

[Krikit 1,164]

This is a really good site: Credit Info Center

Go to the forums section to research your question or ask your own.

Car dealerships offer loans to their clients. You may want to look into that. But first read the following before making any moves. There's a section on "Inquiries":

Credit Scoring 101

[NArocks 13]

You may get stuck at a buy here pay here place that will charge very high interest, but they will at least finace you and you can start to build credit.

I think cash for clunkers is over.

Edited August 27, 2009 by NArocks

[Misty1979 0]

You may get stuck at a buy here pay here place that will charge very high interest, but they will at least finace you and you can start to build credit.

I think cash for clunkers is over.

Yes, it ended Monday, I was all over that when I read about it, but my car unfortunately didn't quite qualify (two miles per gallon less and it would have.)

You're right about the financing through the dealership itself, I'll probably end up going that route. Luckily I can probably afford to make larger payments that I'm required, so I guess I'll just pour all my money and pay it off as quickly as possible to offset some of the interest.

In the mean time, I'll take a look at your link Krikit and see what I can find

PS- Thanks, MrsCat!

[rsn 135]

I personally would never even think of buying from a car dealership. Look on Craigslist or elsewhere on the internet and find a nice lightly used (or heavily used, if you want) car. Buy a carfax report before buying and consider getting a 3rd-party warranty on the car (or adjust your budget to account for car repairs in the future). You'll likely get a better deal this way and it sure beats going to a dealership!

[J&K 0]

Another GREAT link besides Credit Info Center (I'm a member there too) is CreditBoards.

LOTS more info in that link, as there are more members who are active.

First thing would be to pull your credit report. If you have been denied, you should have received a letter explaining which credit reporting agency they used. Go to that website, and you'll be able to request your report because of the denile for free.

If you need help finding where to look, let me know which reporting agency(ies) they were. I can get you direct links on where you need to do this online.

That way you can see how many inquiries, what's reporting (good or bad) and where you stand.

Hope this helps!

Edited August 27, 2009 by J&K

[Misty1979 0]

Ooh Krikit you rock! I just found this on your link:

"Tip: When applying for credit pull your own credit report first (this is a soft hit and won't drop your scores) ok, with credit report in hand go visit your local banks or credit unions. Show them the reports; and don't allow them to pull a credit report of their own unless they can say for sure that you will be approved, this way you save your self unnecessary pulls on your credit report if they decline you. IF they say yes, you are approved, then they will need to pull credit report to seal the deal."

I'll probably head out this weekend and at least give that a try

[thetreble 19]

I personally would never even think of buying from a car dealership.

Okay. Sorry, this comment makes little to no sense.

Any ways, trying one of those car dealerships that offers high interest loans is probably your best bet. It will probably be 12-18% though which would be a lot.

[reeses16 8]

I think the best solution is to have your hubby apply for the loan and buy the car. Assuming he has a good credit score. What matters is your household will have a working car. You don't need and auto loan to build credit in the US. A credit card will work as well and you can avoid high interest rates by paying it off before the due date.

You said that you applied for a loan twice in the last 3 months from your bank. Do not apply for any more loans. Part of your credit score is based on the number of inquiries to your credit history (each loan or credit card you apply for is an inquiry), so I think you are just harming your score further.

You (and your hubby) should get a copy of your credit report and your FICO score. This way you'll have a better understanding of why you've been getting denied and you'll know you score so you can measure your improvement in the future.

Edited August 27, 2009 by reeses16

[thetreble 19]

Ooh Krikit you rock! I just found this on your link:

"Tip: When applying for credit pull your own credit report first (this is a soft hit and won't drop your scores) ok, with credit report in hand go visit your local banks or credit unions. Show them the reports; and don't allow them to pull a credit report of their own unless they can say for sure that you will be approved, this way you save your self unnecessary pulls on your credit report if they decline you. IF they say yes, you are approved, then they will need to pull credit report to seal the deal."

I'll probably head out this weekend and at least give that a try

I don't think in this economy that will suffice any more. They will pull their own without question so it might not work. Unfortunately the markets are just bad and they are afraid to loan money to people.

I think the best solution is to have your hubby apply for the loan and buy the car.

Agreed. Is there a reason why he can't try to taket he loan misty?

[rsn 135]

I personally would never even think of buying from a car dealership.

Okay. Sorry, this comment makes little to no sense.

Any ways, trying one of those car dealerships that offers high interest loans is probably your best bet. It will probably be 12-18% though which would be a lot.

It would make perfect sense if you read the entire blurb and didn't simply consider one part of it out of context.

You can pay 12-18% interest on an overpriced car, or you can pay 0% interest and get a much better deal by buying from a private party. Your choice.

[thetreble 19]

Maybe a used car, but I'm assuming you'd buy a NEW car from a dealership.

Your words were, "I personally would never even think of buying from a car dealership." You didn't specify.

And, if you are buying from a private party, I'm assuming you are purchasing the car outright. What if you don't have 3 or 4 grand to do so? No one is going to give you a loan at 0%. Some dealerships were doing that a few years ago but not any time soon.

[familyguy 2]

I personally would never even think of buying from a car dealership.

Okay. Sorry, this comment makes little to no sense.

Any ways, trying one of those car dealerships that offers high interest loans is probably your best bet. It will probably be 12-18% though which would be a lot.

It would make perfect sense if you read the entire blurb and didn't simply consider one part of it out of context.

You can pay 12-18% interest on an overpriced car, or you can pay 0% interest and get a much better deal by buying from a private party. Your choice.

Have your husband co sign for you, that way you get to build your credit score. BTW a paid collection on your CRA can hurt more than an unpaid as it birngs it current for reporting purposes. Derogs ding your score less as time passes. Good Luck

[rsn 135]

Maybe a used car, but I'm assuming you'd buy a NEW car from a dealership.

Your words were, "I personally would never even think of buying from a car dealership." You didn't specify.

And, if you are buying from a private party, I'm assuming you are purchasing the car outright. What if you don't have 3 or 4 grand to do so? No one is going to give you a loan at 0%. Some dealerships were doing that a few years ago but not any time soon.

Correct, this is for a used car, which I specified when I said

find a nice lightly used (or heavily used, if you want) car

After I said I would never buy a car from a dealership, I then talked about buying one from a private party and said

You'll likely get a better deal this way

Also correct, when buying from a private party, you purchase one outright. However, due to the fact that there are no overhead costs, buying from a private party is a better deal. Of course, if you need a car now, don't have a few grand on-hand, and are unable to continue to repair your current car until you have enough saved to go the private party route, then I guess buying from a dealership is an option. If you own a home, another option would be to borrow against your house and use that money to buy from a private party. You will likely get a better interest rate that way.

In summary, my advice is: explore all your options before financing through a car dealership.

Edited August 27, 2009 by rsn