QuestionQUESTION: I'm getting ready to buy my first car in a couple of weeks. Right now I'm debating getting financing on my own before going to the dealership or just working out the financing at the dealership. I would really prefer to get my own financing before going to the dealership, but I'm not sure which bank would be best to go to. So I'm hoping you can kind of point me in the right direction. I'm 23 and my equifax score is about a 634 when I checked in February. I plan on putting down about 4000, but my credit isn't that good because I have about 4 credit cards, but I always pay them on time, no late payments. My monthly income is about 1500. I would really like to get financed without having a co-signer, but if I need to have one to help with income I could use my mom, but the downside is her credit is worse than mine. I have been at my job though for 3 years, and I've been at my place now for year. So where do you think I might be able to get financed on my own online? and what kind of interest rates should I be expecting?
ANSWER: Hello Dee,
Sounds like you have everything working in your direction. I would talk to your local Credit Union first and sit down with a loan officer and explain to them your intentions. It would be a real plus to be pre-approved before going to a dealer, being your a first time buyer. I do worry about your debt ratio, you said you make 1500 mthly, is that take home or before taxes? You said you have your own place and 4 credit cards and your going to make a car pymt? I don't know what kind of balances you have on your cards but it may be wise to put 2000 down on a car and pay 2000 off on your cards, to relieve some of your debt ratio. You can talk with a loan officer about that more. You should get a prime interest rate but some dealers are going to tell/quote you a high rate and explain to you it's because your a first time buyer. That's why you need to be pre-approved.
There are many online banking companies but you need to try your local banks first, I know "Capital One Bank" had a good first time buyers program at one time. You need to take it nice and slow with the credit pulling, some of the online sights will send your loan application to several companies and they will all pull your credit separately and you don't want that to happen, you don't want or need a bunch of inquires on your credit bureau. Example is Road Loans is not a bank they just represent other banks. If for some reason you are turned down by a bank,"GO TO ONE BANK AT A TIME".
If you walk into a dealer and your pre-approved you will have a lot more control and have a better experience. You can look to see what the factory has to offer and make a much wiser decision between your bank and theirs.
Good Luck, let me know if you need more.
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QUESTION: Thank you for all of that information. between my last pay check and this one coming up before taxes its about 1700. i was thinking about checking out bank of america because i have a checking and savings account with them and a credit card. would it be a good idea to try them first or should i just try a credit union first? im looking for a car that's between 10 and 12 thousand because i really wanna get something certified used. that's why i was trying to put down about 4000 so my payments wouldn't be to high. but should i expect my interest rate to be any higher than 17 percent?
AnswerThe formula for payments is, at most 16% of your monthly income, so your going to qualify for a $270 pymt. I would go to a credit union first, you receive one on one treatment and in most cases you get to actually talk with a person. Then if that doesn't work out for some reason go to Bk of America. From what your telling me and depending on the year car you choose you should receive a rate of 10% or lower. If you are approved with an outside source, like a CU or BK, then a dealer should approve you at the same rate or lower. If you buy a certified car, all certified cars come with incentives rates that are usually much lower than normal (2.9%, 3.9%). From what your telling me you should be no were close to 17%.
