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Credit Scores and Vehicle Financing

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  • mourningdovemourningdove Member Posts: 7
    I'm looking to finance my car for the first time and had a few questions. I'm planning on getting a Honda Civic, because right now Honda is offering 2.9% for 36 months and I would like to try to get this rate (or at least below 5%) and I'm wondering how likely I will be in getting this rate. I have checked my credit, and I have a credit score of about 720 at one bureau, but about 670 at another one (not sure of what the other one is). The reason I have the 670 at one bureau is because that particular one shows a negative issue - I had collections on overdue library books (I know). The other bureaus don't have this so I'm fine on those. I just applied for a loan through eloan and they denied me based on that collections (of course they only check that bureau!) and the fact that my balances were high on two cards. I just paid off a significant amount to get me down (I'm self employed so money is never consistent) today, and it should post to my account tomorrow.

    Now I'm wondering if I will be able to get a decent rate with all this. I plan on going to the dealership tomorrow, but I'm wondering if the changes will show on my credit report immediately once they're posted, or if it takes a few days or something.

    I'm fairly prepared to see if I will get a good rate tomorrow (technically today), and if not, I will walk. I've already done negotiations with the OTD price, so I know what to expect with that. Would it be a bad idea to do this or just wait? Would it affect my credit?
  • joel0622joel0622 Member Posts: 3,299
    How many Credit Lines do you have and do you have any high credit? Credit scores do not always tell the tale. If a consumer has A 730 Beacon on two credit lines with a high line of $1000 it will still be tough for them to get the Super Prefered Rates.
  • mourningdovemourningdove Member Posts: 7
    I have 7 credit lines, all of which are a balance of 0 except for the 2. My credit limits vary from $500-$3800. I'm in good standing with all of them.
  • awareaware Member Posts: 1
    I'm a 26 year old male and about 8 years ago i mess up my credit and just now starting to get it back right [hopefully]. well i read some comment about collection an was wondering can someone tell me some good advice. just got a good job and able to pay those bills off that is now in collection. i just want to know will this help me, because i have been able to pay my truck on time for about a year now. i brought the truck with a beacon of 540 and try to buy a house and they told me to do a complete 180 of my credit. will paying off collection help my beacon score,because I'm spending lots of money to do this, so is this worth it.
  • tidestertidester Member Posts: 10,059
    will paying off collection help my beacon score

    As opposed to NOT paying it off?

    tidester, host
    SUVs and Smart Shopper
  • fezofezo Member Posts: 10,386
    should you pay it off in big chunks now?

    A lot of folks get the idea that what they need to do is suddenly and dramatically pay everything off. That would help but the long term health of your credit score is best served by regular steady payments and not letting yourself reach the point of being in collections. That's the key.

    The bad news is the bad information stays on your report for three years. The good news is the good stuff you build now stay on longer.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • hellag2hellag2 Member Posts: 1
    I recently purchased a new vehicle. They were offering low interests rates and despite my credit score being a high 740 they claimed they couldn't give me the low rate because I had never purchased a car/had a loan before...does this make sense or was the dealership just trying to force me into a higher interest rate? :confuse:
  • joel0622joel0622 Member Posts: 3,299
    Makes perfect sense if your 740 credit score was based of limited or low credit lines
  • forkball88forkball88 Member Posts: 2
    Judging by all previous posts some of us have good to mediocre credit scores yet no matter what it seems you need to have near perfect credit to qualify for advertised or preferred rates. With that being said, I am in the market for a new car probably by the end of summer. At last check my fico was 714 with Experian. I do realize that different dealerships use different reporting agencies. I have only 3k on 1 credit card which will be paid off by the end of this month. Additionally, I have a mortgage on my condo that just recently showed up on my credit report even though I took the mortgage out last November 2006.

    Since I will be a 'first time buyer' in the eyes of the dealership, they will most likely push for a higher financing rate therefore contradicting what my FICO should reflect as a fair rate. Since I have a mortgage, wouldn't that negate the legitimacy behind a first time buyer needing to establish that type of credit commitment? After all I have 'proven' myself with a mortgage.

    I just wouldn't want to hear that I would still need to fight for a good rate even though I have 15 yrs of credit history with no negative marks at all on top of having a mortgage and still have to hear that a car loan somehow carries more weight than a mortgage.

    Any help would be great.
  • joel0622joel0622 Member Posts: 3,299
    Judging by all previous posts some of us have good to mediocre credit scores yet no matter what it seems you need to have near perfect credit to qualify for advertised or preferred rates

    Not true all the time, I regularly deliver people at 1.9%-7.9% rates with credit scores in the 500's.

    With what you have said I could easily get you the lowest advertised rate we have
  • beachykeen1beachykeen1 Member Posts: 3
    Hi All. I am trying to buy my first car. My credit score is pretty low (I don't know the actual score, I have only seen the credit reports), have been attempting to re-build it over the past year, but in the mean time I have been unable to get a loan thru Capital One or my bank (Bank of America).

    My question is, does Toyota work with people who have bad credit? Do they have banks that will finance me or will I simply be turned away? What can I expect once we actually sit down & they see I have less than perfect credit?

    Any advice would be appreciated, thank you,
    Jenny
  • joel0622joel0622 Member Posts: 3,299
    they see I have less than perfect credit?

    Thats to broad of a statement to really be able to give you any advice. it all depends on the severity of your credit and the time frame. Is it recent? Are you currently past due? Did you tank on very small lines of credit? Have you ever had car credit? Etc, etc, there are about 50 other questions.
  • iwasaudreyiwasaudrey Member Posts: 11
    Here is my situation. I was pre-approved for $11,500 (what I applied for) from my credit union for a used vehicle at 8.5% APR. They then told me that they would only finance me up to 85% of what a used vehicle was worth. They said this was due to my not having been at my job that long (4 months) and my credit history being too new (I'm 20 and my oldest card is 11 months old). Other people have told me that this just applies to used vehicles and that the bank would likely fiance 100% of a new vehicle. Do you think this is accurate? I only have $1000 to put down and the 85% thing is killing me in my search for a used vehicle. I am starting to consider buying a new one. Any suggestions for relatively cheap 4 door sedans? I am very interested in the Mazda3 but am open to other suggestions as well since I don't know how much my bank will fiance me for.

    By the way my FICO score with Equifax is 646.
  • biancarbiancar Member Posts: 965
    So your credit is on the low side and you don't have much to put down, but you think buying a new, rather than used, car might be the answer to your problems.

    Nope, it won't be. Are you driving anything now? If so, just keep driving it until you have at least $5,000 to put down. Don't get yourself in debt over your head right now. Life is long and it's a lot better with money in the bank.
  • iwasaudreyiwasaudrey Member Posts: 11
    I was driving my boyfriend's vehicle but we have since broken up. I need a vehicle very very soon. I have to give his back. My credit is good, just new. I have to do what I need to in order to get into a reliable vehicle with the next couple weeks. My family has no money and cannot help me.
  • biancarbiancar Member Posts: 965
    OK, I understand that.

    For your own financial well-being, look ONLY at cars you can afford with what the bank is willing to loan you. Maybe you can find a decent used car for around $10,000; if you can manage to put down $1500 instead of $1,000 there's your 15% down.

    Don't give up; we've all gone through those painful days of being young and broke. Don't worry; if you manage your money well, in a few years you'll be in a much better financial place.

    BUT - if you mess up now, it will take you that much longer to get on a stable footing.

    So be patient and think long and hard about which car to buy There's plenty of 'em out there; you don't have to grab the first thing that shows up.

    Good luck and keep us posted.
  • iwasaudreyiwasaudrey Member Posts: 11
    But then there is also tax, tag and title and dealers fees if they charge them. That is what is taking me over the edge financially any time that I find a used vehicle. The bank said that they will only finance 85% of a vehicle's worth whether it is used or new; so I am just going to have to wait another week and see if I will have enough cash to put out of pocket to cover the difference of what the bank won't loan.

    Thanks for your advice.
  • joel0622joel0622 Member Posts: 3,299
    Ask the dealer what there terms would be. The rate will be higher probably but they can usually finance up to say 125% for some one in your situation. The reason the Credit Unions rates are lower is because they will only finance 85%

    BTW, yes it is true, most banks will finance more on a new car then a used. I take credit challenged people all the time (You are not credit challenged, you just have a limited bureau it sounds like to me)off of used cars and put them on new and get them approved with FMCC. The reason being is that they are in the business of selling new cars. They get heat from the manufacture about putting as many new cars on the road as they can. Used cars do nothing for the manufacture except help the dealer off set the money they lose selling new.
  • isellhondasisellhondas Member Posts: 20,342
    I concur totally with your advise.
  • biancarbiancar Member Posts: 965
    Thank you! I wish someone had given me some decent advice when I just starting out - I ended up buying a used Pinto because my step-dad liked Fords and he thought a Pinto would be fine for a new college grad.

    Fortunately I only owned it for three years, and didn't actually have any problems with it, but the stories about the exploding gas tanks made me plenty nervous from time to time.

    Anyway, back to current situation, to the used car shopper - here's another bit of advice. Try going to Edmunds's home page, go to "looking to buy used car" section, put in your zip code, a radius of say 50 miles, top price of $10,000, and enter a few cars you might like to see. You might be surprised what comes up.

    I will admit I'm partial to Nissans and Toyotas, so I just put in "Nissan Maxima" (I have a 2000 myself) and "Toyota Prius." For my zip code, more than 50 entries came up. Plenty to choose from. Yes, they've got high miles, but I wouldn't let high miles deter me from either one of those makes, IF the cars have been maintained well and you can see the service records. (My Max has almost 100,000 miles and we hope to keep it for another 75,000 or so, at least.)

    You've got more options than you may realize. Don't feel discouraged, you can definitely find a car to buy that's in your budget, and a few years down the road when you're better off, you can sell it or donate it or keep it, whatever, and you won't be behind the financial 8-ball.

    Keep us posted on what you end up doing.
  • frog169frog169 Member Posts: 11
    K well lets see where to start.. Im thinking about purchasing a car an evo or a charger havn't decided but anyways its going to probably be around 20-35k(depending on year). My big concern is on my credit report i owe credit collector money from a bank issue i havnt fixed yet but i will eventually. Will this effect me in any way? i would be putting aprox 10k down on the car, and i would have a co-signer with a cred score of about 780. (me on other hand havn't established any credit) what would u recommend? any info will help, Thanks a bunch.
  • frog169frog169 Member Posts: 11
    hey biancar i know what ur saying about how u wish for another 75 after they hit that 100k bump but from experience of my dads cars, his little 92 chevy s10 u know "american cars only last 100k max" type deal. with keeping up the standard maint. he has currently 286k miles on it, and still going strong. :) i would ask anyone for there recepits for all the stuff they have done to the car etc. so u can make sure they kept it in good condish. most car owners who well maintain there cars have a record folder for there reciepts.
  • tocapallatocapalla Member Posts: 16
    Hi all. Iwant to lease a new car, so I checked my credit scores in January '07 and was horrified to find that for the exact same bank loan, Transunion had me late 120 days, Equifax 60 days, and Experian had no record at all. This was a MISTAKE, and I contacted the bank and they agreed to remove the information. I checked my scores again in late March, and the info was still on my report. I contacted the bank, and they said they updated the file on 2/13/07, but it might take up to 90 days before the info was removed. I just checked my scores again, and the info is still there. What do I do now? How much will my credit scores improve when the info is removed (Trans 702, Exp 679, Equ 699)? This is the ONLY negative on these reports. Should I keep waiting? Are credit scores the only thing that qualify you for the preferred rate? What exactly is Tier 1 credit? Do the same assumptions apply if you take over another's lease? I am really frustrated and tired of waiting. THANKS in advance for any help and guidance.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    You're being a bit vague here--are you saying (if you don't mind clarifying) that you have a legal judgment against you from a collection agency/court---or are you just "haggling" with a collection agency?

    Visiting Host
  • lemkolemko Member Posts: 15,261
    ...but is there such a thing as Tier 0 credit for those at the pinnacle of credit-worthiness? If so, what warrants a Tier 0 rating?
  • frog169frog169 Member Posts: 11
    perty much, im just waiting for them to lower the fee like 1x more. cuz everyone needs some kinda car to get to and from work to make money and id rather have a car to do so then to not and be stuck with something that will break down.
  • buyer909174buyer909174 Member Posts: 1
    Greetings financial Guru's! I'm looking into buying a new car (first one at 28!). I had bad credit for a long time because of unpaid medical bills (long story), but they have all recently fallen off my credit report (last year or so), though I do have one $150 utility bill that goes back to 2000 (never paid it before because of medical bills.. iffy about paying it now since it falls off too after 7 years, and it only shows up w/ one bureau). I would like to get the advertised incentive rate on the '07 Honda Element (2.9%). Can anyone advise if it's even worth trying? (I know if I get turned down it only lowers my scores more, and would like to buy a house soon). My credit scores are

    Experian Transunion Equifax
    695 643 644

    as of 6/20/2007. Besides the almost 7 year old utility bill I have tons of history.. Mostly student loans which go back about 8 years, many paid off, re-consolidated, etc. I have 5 credit cards, all w/ limits around 5K, none of which are over 80% of their max, and have a combined total of around 5k (consolidated into low interest rates.. aproxx 3%). My credit card history goes back some 3.5 years (never late). I've also paid off 2 auto loans through my credit union, both were for around 6k. I've been working as an engineer for the last 2.5 years for a fortune 100 company and earn 65k a year.

    Thanks!!
  • gasman1gasman1 Member Posts: 321
    I may not be a guru, but...

    My advise is to position yourself financially for the house purchase and WAIT on the new automobile. Have patience now and your financial life can be much better. It's much easier to obtain a good car loan than a good house loan. Buying a new vehicle now will only make it more difficult for you to obtain that house.

    Those 5 cards with limits of $5K each and roughly at 80% are negatives on your credit scores. It's better to have pay them down (below 30% each) and keep them there or with a zero balance. If you can cancel a couple of them, that's good. Also, keep the older account active to show longevity.

    So concentrate on making your financial position better. Also, good luck in your career!
  • zw15zw15 Member Posts: 2
    I am a soon to be 16 year old wanting my first car. Other than outright buying it, and paying for it all at once, I don't know how I might be able to get one. nowhere will give me a loan because I have no credit history, and under 18. My parents can't cosign/won't for me because they have too much loan already with two cars, a house and a college tuition.

    I do have a job, but i'd rather not have to wait a few years to get a good car.

    If anybody has some ideas, or knows a place where they will give a loan to a person under 18, I'd love to know.
  • tidestertidester Member Posts: 10,059
    Perhaps your parents or grandparents would consider lending you some cash? You can formalize it with a signed contract.

    tidester, host
    SUVs and Smart Shopper
  • joel0622joel0622 Member Posts: 3,299
    I do not know of a state that will let you enter into a contract under the age of 18, or a bank that will finance an someone under 18. You can join the military but you can't buy a car or a beer.

    Your only choices really are to just save the money and pay cash or do as tidester recommended and see if a relative will be your bank. Though your best course of action is to just keep saving and buy what you need not what you want.
  • nortsr1nortsr1 Member Posts: 1,060
    You are not only goig to need money for the car....but...INSURANCE' as well. ...and believe you me....it "ain't cheap!!!! for a youngen!!
    NORTSR
  • zw15zw15 Member Posts: 2
    Well, atcually the insurance isn't so bad because My parents have a plan that includes me in it for about $50-60 /mo. with a low-insurance type car. And I get good grades which helps. : )
  • sidious6688sidious6688 Member Posts: 80
    I believe when your credit is "pulled" its a snapshot at the time of pulling. If you pay your mastercard in full every month and you have have a 5000 limit, it won't show as using 0 of 5000, it will show as using x (whatever the balance was as of the moment credit was pulled) of 5000. If you charge 4k a month, the credit pull might reflect anywhere from 0 to 4k. If the timing is such that 4k shows up, you'd be utilizing 80% of your available credit, at least on this card. I ran into this previously, very irritating. You could not use the card for a month or 2 to guarantee the "pull" shows "0 balance" and thus no payment due. Credit utilization is one of the major factors in your score. Over time as your limits are increased, the 0 - 4k fluctuation will be insignificant and you won't have to play this game. Its really rather silly, but its the way it works. Here you are paying the thing off every month and the guy who has a $500 (with say 2k limit) balance and pays the minimum every month could have a higher score, as his "utilization" never exceeds 25%. :surprise:
  • sdedmundssdedmunds Member Posts: 13
    I'm going to buy a new toyota rav4 and want to know if I finance at the dealership or online.

    My first thought was to finance with eloan. Then I read stories of dealers not accepting eloans. So now I am wondering if I should finance with capital one or just go to the dealership?

    My credit score was about 780 a few weeks ago. Based on my score what kind of interest rate can I expect from Toyota financial. Right now I think I can get 6.35% from capital one (according to bankrate.com). Thanks.
  • lemkolemko Member Posts: 15,261
    I bought my house nearly five years ago and took out a modest mortgage. Does buying a house that recently ding you credit? Does even having a mortgage ding your credit?
  • qbrozenqbrozen Member Posts: 33,733
    it should never "ding" it unless you haven't made the payments on time.

    '11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S

  • rroyce10rroyce10 Member Posts: 9,332
    1.) Having a mortgage payment that's "on time", is what it's all about - and it will keep your score high. .... but, if you've got some 30 or 60 day late's, then you're looking at the down side of your credit bureau (and falling) ...

    2.) All this talk about "subprime" customers and bad lenders, is really about what the mortgage customers have done since they've bought the house ... if they went into the home with a debt ratio of lets say 20%, and 48 months down the road you're sitting at 65% .. then the only person they can blame is themselves, not the mortgage payment or the lender.

    That said, I noticed you said a: "modest mortgage" .. like cars, it's always wise to put some big money down, and finance small numbers - sounds like you did both, smart man.



    Terry ;)
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    I don't think going into heavy debt at your age is a very good idea. It will burden you or your parents. I would suggest perhaps in informal and modest loan within the family to buy a decent but older Japanese car for say $5,000 bucks which you could pay back to your parents/grandparents at $100 month for the 4 years of your college. Your job will cover those payments and you will learn to take care of what is yours, not somebody else's. And your insurance will be cheaper because you don't need comp/collision on an old car, just liability. And if you back into a tree now and then, no big deal.
  • nthenthe Member Posts: 414
    you also have to check your state laws about legal age to buy a car. here is alabama, you have to be 19 to buy a car.
  • nthenthe Member Posts: 414
    well, go to the dealership, apply for financing with them, and if they can't beat the rate, they go with cap one. yes, some dealerships dont take cap one (mine doesn't), but the one you are working with might. Also, don't tell them its cap one, just tell them you have been approved for 6.35 and if they can match or beat it, they get the deal.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    E-loan seems to offer good rates. I've dealt with them, and so far so good. Real easy.
  • casolorzcasolorz Member Posts: 88
    We are going to purchase a car soon, my wife has credit around 690 and I have around 650, what will we qualify for? will it help to get the loan together?
    Thanks.
  • nthenthe Member Posts: 414
    there are too many other factors to be able to tell you what you qualify with just scores. Income is a huge factor, downpayment, job history, existing auto loans (if any), auto loan history (again if any). I just had someone a couple weeks ago turned down by everyone that had about 70% down and a score similar to yours. problem was he was in college, had a part time job, and didn't make enough in the banks eyes.
  • nthenthe Member Posts: 414
    a good first step could be to apply at eloan, and your local bank, that way you know what kind of rates to expect, and potentially how much you might qualify for. Most dealerships can beat tradional bank rates, but your bank can at least give you info on what you qualify for.
  • casolorzcasolorz Member Posts: 88
    Well we were hoping to get manufacturer financing (as in acceptance corp). Income shouldn't be a problem as we both can live with just one of our salaries... job stability is great too. Do the scores seem good enough then to get one of those 2.9, 1.9 or even 0% offers?
  • tkcoloradotkcolorado Member Posts: 39
    I am in a really tight spot. My credit score is 774. I have a very low income due to my son being ill and me not being able to work. It is about $1,000 per month, that is 100% reliable. I have two credit cards that have a credit line totalling about $20k, but the amount owed is only at $900 (at 5.9% fixed rate). I need a car (I really need a car not want, ours has about 163k miles on it and its dying a slow painful death) but was told by one dealership there was no way I would get a car loan with that low of an income (I have no rent, no other loans, etc.)

    I have been putting "payments" away for every month I can get out of my current car now, so I have about $4,000 down. Is this dealership correct?
  • tidestertidester Member Posts: 10,059
    If you're looking for a new car you may have some trouble getting a loan, depending on the price, since lending instutions will be interested in what percentage of your income your payments would represent. I'm sure you would be able to get financing for a decent used car.

    tidester, host
    SUVs and Smart Shopper
  • joel0622joel0622 Member Posts: 3,299
    Just surface looking what you are saying I would say that you have an 75% chance of qualifying for special rates.
  • joel0622joel0622 Member Posts: 3,299
    I have been putting "payments" away for every month I can get out of my current car now, so I have about $4,000 down. Is this dealership correct?

    On $1000 a month income it will be very tough for you to qualify, and if you did you would only qualify for something in the $180 a month range.

    So with that being said, if you do a 72 month loan @ a 6% rate with $4000 down and were able to get $1000 for your trade that means you could buy a car for $14600. if you looked at a new car that had like say a 1.9% rate for 72 you could look @ a $16K car.

    It will differ a little, my calculations are based off of TN taxes.

    BTW is that $1000 based on take home pay or is that gross?
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