Hey Guys!
I would like to get some advice related to auto loan for buying a used car. My credit score is not so good, so I don’t know if i’ll get the loan in a good interest rate. I am not looking to buy a very expensive luxury car or anything, just a ride in which I can go to work and come back home. Some auto loan companies have suggested that I may be eligible.
What are my chances if I don’t have any other ineligibility other than a credit score on the lower side? I have a job with reasonable income, so I am sure I can pay the loan back without any issues. I have read about reasons I may get disqualified in this auto loan company’s blog, and none of those points are applicable in my case. So what are my chances?
“My credit is not so good”
Like 600’s not so go, or 500 or lower, “I’ve made some terrible decisions” not so good?
Chances are you can get a loan somewhere the question will be how high your rate is. I wrote the loan risk grading programs a bunch of credit unions use and it goes off the following 5 categories. The percentages are how much weight each category carries by default though each CU can tweak them. The defaults are from the financial advising company I took the matrix from.
Capacity (Debt to Income) 35%
Character (Credit Score) 25%
Capital (Liquid Assets/Debt) 20%
Collateral (Loan to Value) 15%
Condition (Occupation Code) 5%
^ That’s a pretty well followed industry standard on evaluating loan risk and as you can see debt to income is actually more important than credit score. So if you’re coming in with a low credit score you can lower your chances of getting denied or having a really high rate by scoring well in other areas. Of course a lot of people have poor credit scores BECAUSE their debt to income is bad so for them they’re starting out with 60% of their risk grade already looking bad.
At the end of the day if your credit is really bad you’ll just have to fix by buying less car and taking the hit on your monthly payment in interest. Make good financial decisions, always pay the loan on time, and in 3-4 years when the loan is paid off your credit will be all fixed.
If anyone is wondering, occupation code is basically a big table where they look up your job and assign a risk. A union tenured teacher is basically zero risk where as a commission based sales job would be high risk etc.
-
-
- Updated - - -
-
Oh, and join a credit union. They’ll be more forgiving when it comes to loan review. A lot of NYSpeeders have used Western Division locally. If you have one that’s associated with your work even better.
I’m just excited for adam002 and it’s next blog!
I hope you really didn’t waste your time writing this. Seems like a bot who just wants to spam the link.
LOL… I didn’t even see the stupid auto loan blog link.
But no, I’ve been on boring fucking conference calls half the day so anything I do during them is making my time less wasted.