Limited Credit History – Auto Loans

[aidan80 9]

I know this is off topic even for an immigration board but I'm thinking I'm not the first and won't be the last so…

I posted a wee while ago about buying a new car, I've finally settled on a dealer and a price for a new Nissan Versa 1.8 bare bones with A/C (perfect for me!) final price out the door is around $13,750. Now my issue is as the title suggests I've a limited credit history of about 2.5 years and employment history almost 3 years now. No one seems to want to give me credit not as much as a crappy credit card and I've already got two with little balance. My FICO score has taken a bit of a knock and is not settled at 701 last time I checked.

So how have the rest of ye's done it, bought a car with little credit history but a stable decent paying job and without a co-sponsor. I could ask my wife but since we're getting divorced it's unlikely she'd want to sign up lol.

I know there are companies out there that lend to people like myself but does anyone know of any that aren't total sharks? Most seem to want to lock you into a short term, high payment, high interest loan with no way to pay early and get out without it costing more. I know I'll pay a higher interest rate and have to put down a bit more up front which is fine but I need to be able to buy out or refinance in a year or so to a lower rate.

[one...two...tree 2,762]

I'd recommend you try a used car dealership and if $13 grand is about what you want to spend, look at late model used cars that fight in that price range. Expect though to pay a higher interest rate, and you should come up with at least $2,000 down payment.

Look at it from the long term. If you get a used car for under half that, and then pay it off in a couple of years, you'll be in better position to buy a new car.

[aidan80 9]

I'd recommend you try a used car dealership and if $13 grand is about what you want to spend, look at late model used cars that fight in that price range. Expect though to pay a higher interest rate, and you should come up with at least $2,000 down payment.

Look at it from the long term. If you get a used car for under half that, and then pay it off in a couple of years, you'll be in better position to buy a new car.

I expect to pay higher interest and I can put down a decent enough 25% deposit on a vehicle. I've looked at used in that price range but there's way too many miles on them for the money, not putting out that kind of money for a car with 40k+ on it. Used is a 50/50 I could get a good car or I could get junk that someone put hard miles on! Plus I don't trust any of those dealers as far as I could throw them. I know they are paying nothing next to what they charge for used cars, it's like pulling teeth trying to get them to give you an actual price. Problem with used is I'd end up paying the same amount of money so I'm thinking if I'm going to pay that kind of money then why not buy a new car.

I could go further down the ladder in used but that takes me back to what I'm driving now! lol it drives fine but I'd like to actually build my credit up on something that isn't junk like credit cards, loans for things I don't actually need right now. I'd prefer it be a car as I'd like to buy a house in the years to come. I'd prefer to buy a house without being forced into taking on debt along the way just to show the banks I can handle credit.

Edited October 7, 2009 by aidan80

[S and S 12]

The first car I financed by myself was when I was 21 yrs old. It was used, but only about 2 yrs old and it had 31k miles on it. I bought it for around $12,000. I had started building my credit about 2 yrs or so before. First thing I had done is get a $800 signature loan from the bank. I paid it each month on time for 12 months which helped me. About six month after I got that loan I started with some high interest credit cards. I kept a balance on them (not a high balance though) and paid them on time each month every month. Those two things allowed me to get a loan for that car without anyone's help. I paid on that car for about 3 yrs and then went back and bought a new one for $20,000. Because I had paid on the first car on time each month and built up my loan history, I had no problem getting the bigger loan later. It just takes baby steps.

[aidan80 9]

The first car I financed by myself was when I was 21 yrs old. It was used, but only about 2 yrs old and it had 31k miles on it. I bought it for around $12,000. I had started building my credit about 2 yrs or so before. First thing I had done is get a $800 signature loan from the bank. I paid it each month on time for 12 months which helped me. About six month after I got that loan I started with some high interest credit cards. I kept a balance on them (not a high balance though) and paid them on time each month every month. Those two things allowed me to get a loan for that car without anyone's help. I paid on that car for about 3 yrs and then went back and bought a new one for $20,000. Because I had paid on the first car on time each month and built up my loan history, I had no problem getting the bigger loan later. It just takes baby steps.

See that's what I'm thinking because that's more or less what I did back home till I got to the point where they approved me to buy a house, I which I never bought. Over here in America.. It must be the "credit crunch" or something because I've been slowly building up my credit for the past 2.5 years I've used and paid off credit cards, small amounts but enough to show use and a steady payment history. I've currently got 3 credit cards with almost no balance as I typically pay it off. I was keeping a balance on one of the cards just to generate a payment history over that past 2 years but it too is now paid off. The rejection letter I got stated I lacked a sufficient credit history in order to be approved? I don't know what else they want?

I'm thinking of just taking out a $2,000 loan secured on my savings and waiting a few weeks then paying it off. That should throw a few extra points and another note in my file.

[rebeccajo 14]

I'm thinking of just taking out a $2,000 loan secured on my savings and waiting a few weeks then paying it off. That should throw a few extra points and another note in my file.

I don't know if those types of loans are reported to credit agencies. Before I went to the bother, I'd ask.

I'm like Steven - I wouldn't buy a new car. I'd buy slightly used. Cars depreciate way too quickly. I'll let somebody else take the hit for that and buy one that's a year or two old. Just for the hell of it, why don't you do some research to discover what I'm talking about. What did a Versa cost last year? If you can find that out, then go to NADA.com. I think they will let you do three values a day. Look up what the trade-in, retail, and loan values are for that last year Versa. You'll drop your teeth.

Insofar as financing whenever you do figure out what you want - what are the dealers saying to you about financing? Most dealers have many sources and they are interested in helping you get that loan as it means a sale for them.

[HYENA 4]

you need to join a credit union. Also, working in the industry, you should have 2 credit cards...but keep what you have and pay them off. 701 score is just fine...it's the banks that are keeping the bailout money and not lending. I've for over 850 score and can't get a credit card, either....no kidding! ANy credit inquiries will drop your score for at least 6 months so don't let anyone pull it unless you're commited. I'd NEVER use a car loan company; use your own bank! Credit unions are more forgiving....if your job is connected to any, use them. Otherwise go to schwab since they have zero fees and free worldwide atm (they refund all fees worldwide once they hit your statement).

Just my thoughts...

[Dan J 277]

Unless you got money to burn, brand new is too expensive, it will loose a significant amount of value in the first 2-3 years. But most cars tend to stablize after that, at least for another few years. Each lender has its own requirements as far as credit worthiness, but it wouldnt hurt to find banks offering a low interest rate and start with them. (http://www.bankrate.com)

[aidan80 9]

you need to join a credit union. Also, working in the industry, you should have 2 credit cards...but keep what you have and pay them off. 701 score is just fine...it's the banks that are keeping the bailout money and not lending. I've for over 850 score and can't get a credit card, either....no kidding! ANy credit inquiries will drop your score for at least 6 months so don't let anyone pull it unless you're commited. I'd NEVER use a car loan company; use your own bank! Credit unions are more forgiving....if your job is connected to any, use them. Otherwise go to schwab since they have zero fees and free worldwide atm (they refund all fees worldwide once they hit your statement).

Just my thoughts...

Good idea, I actually am with a credit union and have been talking to them. I'd much rather borrow from a credit union than a big faceless bank or a bottom feeder. The only issue now I have to overcome with the credit union is the request for a co-signer! I don't have anyone that could or would do that. I'm hoping if I can take enough off the top of the car up front that might, just might wet their appetite. I think the credit union has taken into account my job, where I work and the length of time I've been there.

[aidan80 9]

Unless you got money to burn, brand new is too expensive, it will loose a significant amount of value in the first 2-3 years. But most cars tend to stablize after that, at least for another few years. Each lender has its own requirements as far as credit worthiness, but it wouldnt hurt to find banks offering a low interest rate and start with them. (http://www.bankrate.com)

I agree, if I was buying a prius or something that cost $30,000 or more yes I'd be burning money as I drove off the lot. I'm aiming for simple, safe, affordable and basic there's a lot less to lose on that and a lot to gain for my credit file. The idea of buying used at the lower end of the car market for me is not really a feasible option right now.. I've looked at vehicles 2-3 years old and found in many cases they have around 35,000 - 40,000 on the clock already and are most of the time only $1,500 - $3,000 less than new? I did find one or two that were less than $10,000 but the mileage goes way, way up and those where former hire or company pool cars. For that kind of savings I'll take 0 miles and new for just a bit extra! The best rate I've found yet was from my credit union at 7.9 - 8.9 and the bottom feeder coming in at 9.9 - 11.9 the other bottom feeder shot me down lol

anyway I wouldn't mind at least once buying a new car and getting that new car experience. I know next time I'll aim higher up in the car market and will be buying something 1 - 3 years old.

[aidan80 9]

I'm thinking of just taking out a $2,000 loan secured on my savings and waiting a few weeks then paying it off. That should throw a few extra points and another note in my file.

I don't know if those types of loans are reported to credit agencies. Before I went to the bother, I'd ask.

I'm like Steven - I wouldn't buy a new car. I'd buy slightly used. Cars depreciate way too quickly. I'll let somebody else take the hit for that and buy one that's a year or two old. Just for the hell of it, why don't you do some research to discover what I'm talking about. What did a Versa cost last year? If you can find that out, then go to NADA.com. I think they will let you do three values a day. Look up what the trade-in, retail, and loan values are for that last year Versa. You'll drop your teeth.

Insofar as financing whenever you do figure out what you want - what are the dealers saying to you about financing? Most dealers have many sources and they are interested in helping you get that loan as it means a sale for them.

I'm aiming for new unless I come across a really good used deal which may just happen. I've got two of the local dealers down below $14,000 out the door on a new Versa 1.8 which is a good price. Used 1.8 with power windows/locks/doors..etc is still only $2,000 or so on average cheaper with a good 2 -3 years worth of miles on it.

I thought about using the dealers for financing but most of them get a kick back from the leeches that lend the money. It's bad enough they'll be bleeding me dry on the car too. I think my credit union might have a decent rate available for me should I get around the not having someone to co-sign for me lol

[thepizzadude 26]

If your credit score is 700 and the dealership can't get you into a new car with 25% down #######. I sold new and used vehicles for 8 years at one of the biggest Chevy/Honda Dealerships in the country. I gotta say if the dealership can't get you financed you need to go to a different dealership, these guys have pacts with different banks and they can shop your info to 6 or 8 different lenders, they GOTTA be able to get it done or else THEY SUCK at their job. There is no way in the world that they should not be able to get a bank to do the loan with that kind of a down payment, did you ask your credit union what if you put 25% down?

[Heracles 417]

Did you try a credit union?

[aidan80 9]

If your credit score is 700 and the dealership can't get you into a new car with 25% down #######. I sold new and used vehicles for 8 years at one of the biggest Chevy/Honda Dealerships in the country. I gotta say if the dealership can't get you financed you need to go to a different dealership, these guys have pacts with different banks and they can shop your info to 6 or 8 different lenders, they GOTTA be able to get it done or else THEY SUCK at their job. There is no way in the world that they should not be able to get a bank to do the loan with that kind of a down payment, did you ask your credit union what if you put 25% down?

I haven't let the dealership try just yet as I'm trying to limit as much as possible any hits on my file. I've had 2 in the past month. The problem isn't that I could put 25% down, actually it's almost 30% or that I couldn't make the payments I make more than the car's cost a few times over per year.. the issue seems to be my credit file runs for only 2.5 years. I did ask my credit union could I borrow x for a car and their response was yes get someone to co-sign and your ready to go.

I am going back to them to say look what if I put 25% down up front, I'll also take that to the bottom feeder and ask them the same question. I've no doubt the dealership could put me in a car tomorrow but the lenders they have will want to trap me into short loan, high interest and penalties for paying off early or refinancing. I've asked and they said once your in it's not easy to get out of their loans they actually said try your bank first! Credit union is my first choice dealer is tied second with the bottom feeders. I can't afford a loan so short my payments are more than my rent but perfer the average 3 years if I can get it. I can pay it off early but not if I'm hit with "fee's" for doing so. I'm trying to get the best I can with what I've got.

I should just turn around and say to the credit union here look if I don't pay my 401k is yours that will easily cover the cost of the stupid car but not by a lot as I've only been working 3 years over here in the US lol. Well between that and my 25% the car is basically paid for.

[aidan80 9]

Did you try a credit union?

I did!.. they said yes but... get a co-signer which is great if I had one, which I don't. I'm hoping more cash up front might tempt them! I'm hoping if I do this I can do it near the end of next month... maybe get a few extra $$ off if they are trying to move all the 09's out the door!