Post # 1
So Darling Husband is 24 and in medical school; I’m 23 and a school teacher – in other words, we don’t have a huge income, but we have a little extra money to play with. We have both been driving around the same cars for years. I’ve had mine since I was 16 and Darling Husband had his for a few years before the computer went out completely a couple months ago. My car is basically at death’s door. It’s been acting up like crazy for the past few months – we’re constantly having to pay money for small repairs, but it really adds up!
I have an hour commute to work which is really putting a lot of wear on my car. I’m terrified all the time that my car is going to break down and leave me stranded. So Darling Husband and I have both decided that it’s time for a new vehicle. We wanted to wait until after we got our tax refund so we’d have a larger down payment, but I honestly don’t think my car will make it that long. Since I am commuting and traveling so much, we want a good car with low mileage and a warranty that is still good – which means that we will have to apply for a loan. We’ve went and looked at a couple dealerships. I expressed my concern that I am afraid we won’t qualify for a loan, but the dealers said it shouldn’t be a problem. The issues are: I have absolutely NO ONE that can even possibly co-sign for me (nor would I want to ask anyone to do that). Neither of our parents’ credit scores are that great and would probably hurt us instead of help us. My gross monthly income is right below $3000 (Yay for low teacher salaries!), with rent and utilities at $575 a month. I also haven’t been at my current job very long (only 4 months), but before this I was a sub for a year. Still, I don’t know if that’s long enough. I started working right after graduating, but that was only in 2012. We’re trying to build our credit and I don’t want to run any hard line credit inquiries to hurt our score (and make it even more difficult to qualify for loans) if I end up being declined for one of these reasons. I know stable employment for the past 2 years is preferred, but do they take into consideration if you just recently graduated? And how do they determine how much of a loan you will qualify for? I asked one of the dealers, but he basically said they’d have to run the credit score and just try in order to see because it’s different for everyone. I’m just really stressed out. We desperately need a car and I know we can handle the payments. It’s just scary because we’ve never applied for anything this big before. Any advice?
Post # 3
@dayl20: Can you talk to your bank? Only reason I say that is because usually dealership finance has a lot of hidden ‘extras’. One dealer I had toyed with going through, the finance charges you account keeping fees, fees for sending you a statement, fees for paying more than the minimum (to make up for ‘lost interest’). The interest was lower through the dealership’s finance company, but all the fees on top of that meant that it didn’t make much of a difference. Your bank would have a clearer picture of what you spend and what you can afford, and my bank doesn’t penalise you for paying out the loan early. Just something to consider!
Post # 4
Have your checked your credit reports and scores yourself so you know where you’re at? It’s free to do once a year and doesn’t impact your score. I’d start there so you know where you’re at. Car dealerships are pretty quick to hand out financing so I wouldn’t worry too much. Do you know of anything credit wise that might be an issue for you other than the employment history?
Post # 5
@Deejayelle: Thanks for the tip! We hadn’t considered that, but now we definitely will.
@jny1179: There’s nothing credit wise that should hurt my score. I have one joint credit card with Darling Husband that we’ve never been late for a payment on. I also have 3 small student loans, and I’ve always paid them on time. I have one other online credit card through ebay that I absolutely never use, but it is still active. I tried to get my credit scores this morning on the FICO website, but it says they can’t verify my identity. We’re pretty sure that it’s because we’ve lived at 3 different addresses in less than 2 years. I’m calling tomorrow morning to figure out what the issue is. I do have a creditkarma account, but I don’t know how accurate their credit score is. If it is accurate, I’m pretty happy with my score.
Post # 6
@dayl20: You should be fine, i was approved by myself. as in no one cosigned with me, and my interest rate was the lowest possible.
if you use the dealerships people i believ you will get a discount off your car
Post # 7
You should be fine. I got a car loan back in October and I only made about $1400 per month after taxes. My credit score was in the 600s. And I had one judgment on my credit report from when I was a stupid teenager. I also had school loans of about 36k.
But despite all of this, I managed to get a car loan. I got a used 2011 Kia Forte for about $11,000.
However, the mileage on the car was about 82,000. And I have a high interest rate of about 15%. But my monthly payment is affordable. I pay $272.
Prior to that, I had gone to several different dealerships and no one would give me a car for cheaper than $272 per month.
I realized that with my income and my credit, I wasn’t going to get a better deal than that. So I sucked it up and bought the car.
My plan is to trade in my car after about a year to get one that has much lower mileage. I also plan on getting a much lower interest rate.
Basically, I had to accept this deal because I needed a car. I also needed to prove to the banks that I could handle a car loan.
So I decided to put up with the high mileage and interest rate for about a year. Once the year is up, my credit will be much better. I’ll be making much more money, hopefully. And I will have had proof that I can handle a car loan.
So overall, I’m happy with how my car buying experience turned out. Oh yeah, I forgot to mention. I got this car loan completely on my own. WITHOUT a cosigner.
So if I can do it, you should be able to do it. Good luck 🙂
Post # 8
Thanks for the encouragement. I had no problem getting a car. I was approved for a $17,000 Hyundai Elantra. The original APR they had decided on was 6.9%, but when I turned down all the extra packages, they came back and offered to bring it down to 3.9% if I accepted the cheapest package. By doing this, they kept my payment under $300 a month, which is why I declined all the packages in the first place, so I took the deal.
I’ve been driving my Eclipse for so long, which doesn’t have heat. Now that I have a car WITH heat that I don’t have to worry about breaking down, it’s a great feeling!