Credit Scores and Vehicle Financing

steine13

What are the major cons of purchasing a car with a credit card?

The 2-3% fee the dealership has to pay... they'll pass it on to you if they'll let you use the card. But maybe not; I've put up to $2k on a card without so much as a raised eyebrow -- it was partial payment, not the whole wack -- and over $5 at a GM dealer but that was the GM Card, which didn't charge them fees. I think.

The other bad thing is that a credit card doesn't force you to pay the money back in a timely fashion; whether that is a problem or not depends on your financial situation and how much discipline you have.

-Mathias

bdr127

Assuming you're buying from a dealership, they'll probably only allow a couple thousand dollars on a credit card. They'd rather avoid all the fees. You better clear it first with the dealer.

summery

I am planning to finance a new car. So I try to get a lower APR. If I submit 6-7 applications online. Does it will affect my FICO score? And how long will it be reflected on my FICO score? Thanks

danf1

That is a lot of inquiries. I would keep it down to 2 maybe. There is no way to say how much it will affect you, but it will somewhat. If you have great credit, it probably will not hurt you too much. If you have marginal or poor credit, it will hurt more. Inquiries stay on your credit report for 2 years.

summery

Thanks. My current FICO is 758. But I only got 6.25% APR from capitalone. So that is why I want to try more inquiries. I am really new on the finance things. I don't know where I can get a lower one.

danf1

There is more to determining interest rate than credit score. You might try e-loan. They seem to have good rates usually, but keep in mind that some guy named Alan Greenspan has been having fun with interest rates over the last 2 years or so. 6.25% is not a bad rate at all today. My lowest rates right now are around 5.7% with 20% down payment and 48 month financing.

bdr127

Yeah, I agree with danf1... Greenspan and the fed have been raising rates over the last couple years. In fact, they've raised the prime rate 2 full points in the last 12 months. Right now, the Wall Street Journal Prime Rate is 7.25%. Of course, you can find banks that'll do lower than that for top-notch qualifiers, and you'll also find many credit unions lagging very far behind federal rates.

In a time like this when rates are rapidly increasing, it's always tough to get people to believe that any rate is a "good rate"... Most people expect to be able to get that 4.99% they saw advertised this past summer. Unfortunately, it doesn't work like that. Not saying that's you, summery, but there are many people out there that really complain (without any good justification) about rates that banks and dealers quote them.

FWIW, eLoan is showing their top advertised rate at 5.75% for 60 months. (It doesn't say who the actual lender is, though.)

summery

Thanks danf1 and bdr127. Probably, I will take the 6.25%.

allinschenk

Have enjoyed looking over everyone's posts, but still have a couple of questions. My husband and I have a 2000 Jeep Grand Cherokee 4WD with 90K and a balance of $6500. The Jeep has started to have electrical and transmission problems and needless to say, we are starting to worry what's going to go out on it next. We are also looking to purchase a new home in the next 6 months to a year.

So here's the question, how will acquiring a new lease or used auto loan effect our credit scores and getting into a house down the road? Right now, his score is low 700's and mine is low 600's. I have leased in the past, and we have financed quite a few vehicles between the two of us. We are looking at a Saab, Volvo, or another Jeep. What would create the optimal situation for us??

Thanks for the help!

car1shop

Please be aware the FREE website for credit reports is:

www.annualcreditreport.com

Most other websites DO charge you, even if "free" is in the title.

nyer10

Hi,
Wondering if anyone can offer some insignt on what kind of finance rate I can expect. I'll be looking to buy a Honda Civic or Mazda 3 in the next couple of months and here's my deal:
I have about a 560 credit score, pretty good income (almost $60k in NYC), a satisfied tax lien, no bankruptcies and employment and residency at the same place for the past five years. There's no outstanding debt at this time.
I figure the car should cost me at least 18k+ out the door so I plan on putting down at least 7-9 grand.
What kind of interest rate do you think it would be realistic for me to expect given all those factors?
Thanks much in advance.

nyer10

Well, glad no one's answered the first question because I just checked my credit reports and have an update ...

I don't even have a credit score with Equifax. Transunion puts me at 572, but I don't have any current open accounts so Equifax couldn't even generate a score for me. I might be able to get a credit card within a month or so but even if that happens, the Equifax guy told me it would take six months to generate a score and I'd need another line of credit. Am I totally screwed here or is there a chance lenders will check the Transunion score? Also, do I just tell the dealer or a credit union -- if one will touch me -- upfront that Transunion is the only one that generates a score?
Thanks in advance for any input.

isellhondas

If they do check the Transunion report, a 572 beacon sure won't help you.

bdr127

If you don't even show up on Equifax, I'd be inclined to think that you probably don't have much of a lengthly history... Is that right? Often times lack of credit history is just as undesirable to banks as lack of good credit. So if you're in a situation where you're a combination of both, then you probably shouldn't count on a great interest rate.

mikezoomzoom

Most states have maximum interest rates which can be charged... if approved. Meaning if a lender wants to take a chance on you as a result of an undesirable credit history or scenario, they are going to charge a premium in order to accept that risk.

Texas state max on a new vehicle is 18%

Texas state max on pre-owned is 26.4%

It's kinda like knocking on the door of a stranger...

Hi! You don't know me but I'd like to borrow thousands of dollars. Is that ok with you? You mean I have to pay you back more than I want to borrow? Why? Oh... because you're fronting the money to actually acquire the product from the seller. I guess that's alright but why so much? Oh... because I haven't really proven my financial responsibility to anyone and the ones I did are complaining about "me" being late. Whatever!

This is a typical situation that we, as dealers, work with all the time. Any consumer can be submitted to various lenders with callbacks either approved or declined. If tentatively approved, a possible lender will most likely put forth stipulations in order to secure your financing.

Always allow the dealer to work for you... essentially, let them throw your deal against the wall to see if it sticks.

You either can buy a car or you can't. You never really know what you're possibilities are until it's put down on paper and submitted.

ZOOM ZOOM

isellhondas

People with limited credit have to EARN a favorable rate. It takes years to do this and for good reason!

monkey7312

Does anyone know how much a credit score will improve after the credit history is 3 years long? My history is about 2 years and 8 months and I'm not sure if I should wait to try to get a car loan. Since most lenders see 3 years as enough history, will I see a big change in my score if I wait? Will I stand a better chance of getting a loan with a decent APR? My scores are high enough (734, 755, 736) but my history is short.

capri33

Infiniti has a 1.95% special financing going on. What kind of credit score is good enough to get the promo? Does anybody here have any experience? Mine is 740. Not sure whether it is good enough. Thanks.

monkey7312

That is a good score. My score is in the same range and I have noticed that, depending on the credit bureau the score is from, it is either rated excellent or good. They all have slightly different scoring. If yours is in the excellent range on the report that the lender gets you should be able to get that rate since it's the highest score range. As long as your income and debt-to-income ratio are good, you should be fine with that score.

capri33

Thanks. It is from TransUnion. And I checked again this morning. It dropped to 712. Don't know why. Any idea what is the range for excellent or good? My income and debt-to-income ratio are fine. Thanks a lot.

monkey7312

Transunion gives me the lower score out of the three. Equifax gives me the highest. That could be the same for your score. I think your score is considered "good" now. 712 is still pretty high. If you have any credit card debt it will lower it a little. I got about 15 points for paying mine off completely. I'm not sure exactly what the ranges are. I think most are considered excellent at 730 or 750 from what I've seen.

capri33

Thanks a lot. :P

CarMan@Edmunds

Hi capri33. Your credit is in excellent shape. You definitely should not have any trouble qualifying for the special APR that Infiniti is currently offering in select models right now.

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jaadain

Well, I pulled my credit from myfico.com and the 3 scores are..

647 on Trans
629 on Equifax
649 on Experian

My question is.. I have financed 2 cars.. My credit has been reporting for 3 1/2 years, I have 2 credit cards.. Small limits and balances, also have 2 Medical Collections, one for $74 and one for $580, both are about 5 years old. I currently have a Nissan Xterra I am NOT upside down on but only have had about 1 year. So, I am interested in getting a new or used 2004 and up Ford F150 Crewcab (20,000-25,000) and I am going to put 3,000 down.. Does anyone have any idea of what I MIGHT get as an interest rate? Any information would be greatly appreciated. I am looking to buy in the next 3 weeks.

Thank Ya'll

John

jaadain

On my Experian there are no collections, just the 2 credit cards and the cars I finanaced.

biancar

A lot of lenders now are using "universal default," which means any dings on your record, even if not related to the current purchase, will hurt you. Are you in litigation about the medical charges, saying the serives weren't delivered or something? If not, you might want to just pay them off. The black mark on your record there could end up costing you more in higher interest charges than what it would cost you to pay your debts.

peregrine

I had a decent credit score (around 700 across the three agencies as of the end of March) so I decided to apply online to my own bank to see what rates I could get.

I didn't even get past Prequalification. I'm not quite sure why and I can't find anyone in my bank to talk to (big bad country spanning corporation with machine recorded 1800 customer lines).

Will this affect my credit score? Will this affect the rates the dealer is going to see if I ask him to find me financing (I'm going in tomorrow)?

biancar

That could have been a computer glitch, if it wasn't obvious why you couldn't go further. Does your bank have a bricks 'n mortar operation somewhere near you? You might have better luck talking to a loan officer in person rather than trying the telephones.

susan16

Hi

Theres an free online credit score calculator that I find useful, I can play aroudn with the options so as to work out how to get a higher credit score on my applications

http://www.moneyforums.co.uk/credit_score_calculator.php

uthscsa19

I have a Credit Score of 680, and would like to know what kind of Interest Rate to expect. I will be borrowing about 18-19k to buy a 2006 Hyundai Sonata. With a 680 credit score, what should I expect, and what is the best I will do, not counting incentives.

Thanks

biancar

Note that's a UK link, so U.S. users will have to fudge on things like "Post code" and entering the pound equivalent of dollar income and debts.

cti

How much are you planning on putting down? Where do you plan on applying for credit? Can you use a Credit Union?

680 is, I think, a little below average.

In any case, why not call your bank/credit union and see what they give you. You might even be able to apply for Hyundai Credit (if there is such a thing) on their website before you go to the dealership.

Rates can vary a lot. My local bank has 6.1% rates up to 60 months and 6.9% up to 72 months. My credit union has 2.9% rates to 36 months and 4.9% above that. Big difference.

I snagged the 2.9% rate when I bought my car last year. I think I would have a heart attack if I had to pay more than 5%.

sarahap

Hi, I'm buying a used car soon. I checked my credit union for their loan rates--6% to 7%. It occurs to me that I get better rates on credit card offers. The one that came today is 0% until March '07 then 3.5% for the life of the loan. They are begging for balance transfers and I know the deal is they want to me transfer or make one big purchase at that low rate so they can charge 7-8% on anything else I buy on that card and hoping I will send a payment late so they can jack it up to their typical 65% (isn't it about 65% now?).

Is it crazy to think of putting $15k on my credit card to buy a car instead of getting a car loan? I first thought I could always get a loan on the car when the 0% ends. You think I can just go into the car place with one of those checks the credit card company sends? I can see the advantage that I may actually pay it off sooner than if I had a set car payment each month. What's the downside, do you think? :confuse:

qbrozen

Dealer won't let you charge that much on a credit card. Most have a limit of maybe $1k-$2k.

CarMan@Edmunds

Hi sarahap. Unfortunately qbrozen is right. Credit card companies make money on both ends of transactions. They charge consumers who let their balance roll over interest and they charge retailers a couple of percent on every sale. As a result, most dealers will only let consumers charge a couple thousand dollars of a deal.

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theflush

Couldn't she use a balance transfer check? She might have to deposit it in her own account and then have a bank check issued for the purchase. Or she could get a loan and then use the balance transfer check to pay off the loan immediately. I get balance transfer check offers all the time and have considered using one for buying a car.

qbrozen

Yes, if that's part of the offer. She didn't mention it, though.

I have done this myself. We received an offer for 1.9% until the balance is paid off. They offered the checks, which we were even allowed to write to ourselves and deposit in our bank account! That's insanely cheap money.

exb0

Isn’t there a 3% transaction fee on those checks or something like that? Read the small print.

qbrozen

Every company is different. In the instance I was referring to, there was no fee.

Some, like AMEX, typically charge a fee, but its usually the greater of a percentage (like 3%) or $50.

sarahap

There is a transaction fee, 3% but it caps at $50. You're right about just writing the check to myself. It even says I can do that in the letter. Then I can just get a certified check from the bank. I think I might do that.

sarahap

PS. Thanks!

devond

I am having the hardest time obtaining financing. I know my credit isn't good... About 1.5 years ago I was in a car accident and found out that a lot of my medical bills weren't covered. I was more concerned about getting/paying for the med. procedures at the time then about my credit cards falling behind. When they fell behind I couldn't get them back to current and they ended up charging off (after I tried to negotiate the payments and what not - I was trying to be responsible!) It's not that I just didn't WANT to pay them, I couldn't at the time. I have since paid them off and closed them but they still went to collection. ANYWAYS, I am trying to obtain financing for a car now and everyone is turning me down! I make pretty decent money for a 23 year old (about $7,000/month) and have minimal expenses (about $700/month). I have enough money saved for a small downpayment but I was looking at a $15,000 car and the financing guy told me I needed $10,000 down. If i had $10,000 I would just pay cash for a $10,000 car DUH! Does anyone have any ideas?? I am using my fiances car now and I just want my own car and I want the chance to prove that I AM credit worthy and I do want to pay my bills on time! (fyi, I have paid my cell phone bill and utility bills on time for the past year if that can count as alt. credit). If anyone can help me or if anyone can do anything for me, I am obviously willing to take a double digit interst rate for the chance to own my own car on my own without my father having to co-sign which is not an option. Oh also, I had a Mazda American loan in 2003-2005 (22 mos) which was paid on time every payment. PLEASE HELP!

tamaraster

It sounds like you should be able to save a substantial amount of money every month. I recommend that you keep borrowing your fiancee's car and/or taking public transportation for two or three months, save up $5000 or $6000, and then shop again. If you get the same story, then buy a used car for the amount of cash you actually have and drive it for a couple of years until you can establish your credit again.

devond

YEAH i am trying to save money each month and i have about $4,000 but I need a very reliable car that I can put some heavy miles on... I'm in sales and want a decent looking car that I can pull up to my client's house and them not think I am dirt poor - I mean sales is almost all about image isn't it and one that I can put a lot of miles on. I mean the nicer car you drive = the more mone you make = the more clients you help = the better you are... at least statistically that is what is shown but i guess i may have to suck it up and drive a 10 year old car thanks though

qbrozen

i replied in the other discussion you posted in ... just about said the same thing as the previous poster.

anonymousposts

start buying a car for image you get yourself in trouble. Considering your situation you should be buying a car for practical reasons. Why not buy a nice used Civic which will get great gas mileage and require minimal maintenance and repairs. I'm sure your sales ability is based more on merit than it is the type of car you pull up in.

tamaraster

I can see why you want a new car then. But you may be able to get a better deal and easier financing on a gently used car, perhaps a 2-year-old Accord or something like that - a nice-looking car that will run forever.

pwrone

This is a simple case of a finance manager too lazy to do business. It happens all the time. There are several banks that will loan you money--they will charge a hefty fee to the dealership to do it-- but that is what doing business is all about. Check with Mazda sub-prime before going any farther. Expect to pay at least the fee for a down payment, maybe $2000. You say you are willing to take double digits? My friend, you will be at 19.9 and up. Make your payments for a year, refinance the loan, get on with your life. Best of luck.

nateis4real

I'm a 38 year old male who has no credit history, whom has always paid cash for everything. I've financed little stuff like a computer, etc. but, nothing big. I recently got a credit card from Capital one bank with a $200.00 limit and I've used it once and paid the whole amount back at one time. I have practically no savings and about $1000- $1500.00 to try and get a "New" car, Is this possible for someone like me ? Or how do I boost my credit rating ? :confuse:

tidester

Is this possible for someone like me ?

Definitely. I've seen people with less credit history, no credit cards and smaller savings get financed.

tidester, host