Curious--was the one that the salesman offered you...w/navi...was it a manual or automatic?

 

I had that no credit issue happen to me. Its too bad the system is so backwards.

you asked for opinions... I think your co-signer is being very generous, and I also feel like you are getting more car than what you have proven you can handle. Realistically looking at all of the variables, this story has a chance to have a sad ending. Even the loan happy banks are concerned with giving you money- don't take it personally, but understand the reason behind it.

This has nothing to do with option packages, that's irresponsible. I think the right thing to do is for you to get the smallest loan amount and the smallest term you can find. Pay your monthly bill, and soon the car and a healthy credit score will be yours.

Preferably you should do this on your own. And you should also respect the rule about never borrowing money from your family. Have you asked the bank if there is a minimum downpayment they would accept yet? Have you asked your bank about a credit card application? Have you found any information on the internet about building credit?

 

It's an automatic.

It took a moment for me to realize just what you were talking about when you said it was more car than I could handle. I was thinking, "hum, been driving for 16 years, I should be able to handle driving (not buying) most cars short of F1 cars and semi-tractor trailers."

About 14 months ago, I applied for a credit card with American Express because I also shop at Costco. They denied me, and I immediately applied for a Secured Credit card from my bank (only $500 limit). In November, after I got denied the car loan, I raised the limit on the card to $1000. Since then it's still at 1k limit, but I don't plan on raising it anymore since I typically only use it for gas, and only then because I "need to use" it to make the credit card look active. Although I do pay for cell phone and cable tv/internet bills, they don't seem to count towards my credit history.

Early last month, I applied for another loan from my bank and got denied again. This time, the loan was specifically listed for about $10k, making my monthly payments about $200. But even though I want the loan's monthly payment to come out to $200 per month for 60 months, I plan on paying extra each time (additional $100 or more).

Sure, I could wait almost two years to have enough cash to buy the car outright (or only a few months for the Base trim), but in the mean time, I would've spent more on gas than the interest, unless its well over 30%. Of course this doesn't factor in my new insurance costs.

As for minimum down payment, I didn't talk to a loan officer, so I don't know. But I plan on putting a hefty down payment. And by June, I could put about $13k.

While I agree about getting the smallest loan possible, I am not quite sure about the smallest term. The reason is, I want to go with a 60 month term with no penalty for early payments (like I said, comes to about $200). That $200 is half of what I set aside each month in my savings account, and the current goal of my savings account is specifically for buying a car. The numbers change with the different insurance cost (up) and difference in gas costs (down). Of course THEN I also don't have to pay as much in average repair costs too.

At the moment, the "worse case" scenario is if I lose my job, that might be what you're thinking. But, in order for me to lose my job, the restaurant has to go out of business which would directly affect my cosigner. As for other potentials that we can't predict, I think I have built some leeway to somehow manage (to an extent). Of course there are variables that can overwhelm any of us, even those such as yourself.

I'm not sure if I put all my thoughts in response to your opinion, but at the moment, I realize I need to get out of here.

And yes, I know that he is being VERY generous with the offer to co-sign.

 

How bad is your credit score, really? Check it for free at creditkarma.com. And no, cable and utility bills don't count towards your credit history.

It would be better to get a shorter term loan if you can afford it because shorter terms usually have lower interest rates. Unless you can get some special rate, like the 1.9% APR Honda was offering a while ago, then that may be the better deal. Play around with Edmund's calculator to figure your total costs.

The bigger the down payment the better, but at least 20% will keep you from being upside down. Is $13K all you have in savings? If so, you should save a good chunk of that as an emergency fund.

 

oh good! You are already well on your way to an established credit history. I hear 24 months is standard.
Personally, I would hate having a co-signer on the hook for my car for 5 years. Maybe after a year or so of payments, you could get a new loan without him on it. That's why I mentioned a short term loan.

 

Either, way I feel bad for you having to pay those cook county taxes... time to move out to the suburbs.

I also vouch for creditkarma.com It helped me get my score from 658 to a 708 in 3 months. Not great but not bad. I too have only had my credit card open for a year and a half now.

 

Forget the great prices you read about here. They are not the norm. The price quoted to you is what to expect. Bottom line, if you can't purchase a new car yourself, don't drag others into covering your ass. It's that simple. I couldn't buy a new car, my Fit, until age 46. Last year, the numbers finally worked and I could swing it. You know what I did before I couldn't afford a new car? I drove used cars that I could afford to buy. When the numbers work and you can get loans and afford to pay them, rock on. If you can't do it, then you can't. It's just that simple. How old are you to be so short on credit and income? Me thinks there's more to the story.

Dan

 

I checked my credit score last month, transunion and experian show my FICO as 706/709 (i forgot which gave what). The biggest "negative" in my credit history is the fact that I only have one credit line, a secured card, and that one line is "young" (at 14 months). One thing I hate about having credit history... "pre-approved" credit applications in the mail. So, while the score is "good", it's just young.

I might not put the whole 13k as down payment, maybe a little less at about 12k (leaving that 1k for insurance, had some quotes from 600 to 800). But yes, that is effectively my entire "savings." However, I have been building myself a buffer in my checking account. I've been making it steadily grow, though slower than my savings account. So, even though it's not as big as my savings, it affords me a good chunk of money if I need it. I know, kinda backwards, the savings account itself should be the buffer.

BTW, I'm already in the "burbs"... I'm paying 8.25%. It's only slightly better in Lake County by .5% (7.75%)... at least it's not Chicago itself, 10.25%!!!

The dealer said that they would try to get me a loan, so the plan is to talk to them tomorrow and try to get the loan myself. Even if it's a little high. If not, then I will fall back and call upon the co-signer. Like shegetstodriveit said, I could go maybe a year and then get a new loan without the co-signer. I have no intention of asking him to pay any part of the loan itself. I can pay the loan, I just need to get it.

As for what is up with my credit history... back in 1996, I got a "pre-approved" application for a CC. I filled it out, but got denied anyway. And since then, I have not bothered with applying for any other credit card. That is, until Feb of last year. I have been using debit cards and check cards that act like credit cards for all my purchases.

 

I agree. I waited for a long time too to buy the car. Was a poor student, then was saving, and then bam! Wrote a check to buy it on the spot.

I hate owning money and especially for a long time and a lot...

 

You have your money in a bank, correct? Do they not offer loans? I'd be willing to bet they give you a better rate than any dealer would. If you haven't applied for a loan at your bank, I would see what's up there before settling for a high interest rate dealer loan. They want to make money on you, plain and simple. And don't negoticate from a monthly payment standpoint. You'll take on a nice comfy payment and pay double for the car, in the end.

I'm sure you have the best of intentions with a cosigner, but in reality you'll likely ride the loan out, at a high interest rate that you struggle with, and not refinance. Again, even with the best of intentions, all it takes is something to go arry with your income and then you screw you and them. I wouldn't put anyone at risk, no matter how well intentioned you are and they are. Small claims court is chock FULL of cases just like you're looking to setup. Be....careful. I should be telling that to your cosigner, in fact. Never...cosign...for...anyone. The thing is, if the car is really beyond what you can truly afford, there are cheaper new ones out there. Or, used. I know that sucks to hear. But the only thing worse than no credit is someone extending credit and then you defaulting. Then your brand new credit is shot to shit. Keep your head on my friend. I don't mean to come off like a schmuk, really. But there's reality to consider, beyond a nice shiny new Fit.

And btw- the last thing you want to do is throw all your money in a down payment. That's a setup for disaster. Never make yourself cash poor. And your bank won't give you a loan with all your money, their collateral, gone to a down payment.

I'd wish you luck, but it's not about luck. So, I'll wish you good sense!

Dan

 

i heard the navi that comes with the fit isnt all that great o.O...i'd rather just get an aftermarket

 

While I have no doubt it isn't the best option for a Navi head unit, navi isn't the only reason why I want that trim. Once I get the car, I expect to use the stock unit for a while. After a while, if I get really bothered by it, I'll try to replace it with a unit that can use the additional controls (steering, voice, etc). But, I'd have to be REALLY pissed off about it though. I mean, the only reason I replaced the HU in the Pathfinder was because the stock one stopped working properly (no audio coming out). That one didn't play mp3s on CDs (initially, anyway.) and I had to use a cassette adapter to listen to my iPod.

My bank denied my application for an auto loan. Today, after visiting the dealer, I'm finding myself dealing with one really bizarre problem... they can't find my credit, which could be why the bank denied my credit also. The dealer said they put in the info that I put on the application, but NOTHING popped up for me, as if I didn't exist. The sales guy was asking if I had a resident card and this and that to prove who I was. Tomorrow, I'm going into the dealer again, but with some papers (citizenship, SSN, etc) and try to see if we can work something out.

I bring up monthly payments as way to budget myself under the amount I'm already setting aside for it, that way, when the remaining money I set aside gives me an additional buffer, I'll put part of THAT as early payment into the principle. Let's say I get my target of $200 per month, but I put in on average, $300 instead. On a pure numbers standpoint, I mean not looking at it as principle/interest, but just a payment, I could pay it off 20 months early. In actuality, it'll be a little bit sooner since some of the interest is negated.

Like I said in the other post, while it is my "entire" savings, it's not all my money (as I said, I have quite a bit in my checking). My savings account will "regrow" and continue to grow even as I make payments on the car (although at a slower rate for the time being). My checking will continue to grow also.

As for "paying double the car"... I'm not even sure how that would be possible. Let's take a look at it literally first (double the car). If I put half the value of the car as down payment, the interest amount would have to come up to triple the remaining amount... close to an 80% apr (ride out the entire 5 years). That's just insane! If we look at it as me paying double the amount remaining on the car after down payment, it would have to be just over 30% apr. Alot closer to possibilities, but I am "expecting" something a bit lower. Obviously, with less down or none at all, the percentages needed for the effect go down.

If you ignore all other numbers, and just factor interest payment (on half the value of the car) vs difference in gas over 5 years, just over 25% apr would break even (over $7,500). I'd almost take that deal... but hope it doesn't come close to that. I hope/expect it to be even lower, something in the 10-15% range.

And just as I said, while I am aiming for a "comfortable' monthly payment on paper... I intend on putting more so that I can pay off the loan early.

As for me defaulting on the loan... there's ZERO chance of that. You see, the thing about my family... even though I don't want to ask my family for money to pay for the car, IF (this case is a BIG IF) I lose my job within the next few years and I can't pay, my family will step in (I know my brother will). The reason isn't just that we're family... but one aspect is... me with negative credit history isn't useful, but they can get use out of me with positive credit history. Get it? Don't take it as me depending on my family as fallback, it's only a statement of fact. However, in the case of the cosigner, my income is heavily dependent on him, as he is also my boss (he's one of two head sushi chefs and co-owner of the restaurant).

Some of you guys make it seem like I'm putting all my eggs in one basket.

On the topic of me refinancing a year or something down the road, what you said might be true, that I might not refinance. My current limit for payment that I think would be struggling would be $300 just for the car loan (~30% apr). Not even Carmax does that to people with bad credit, but they come close with 25% (some folks on myfico.com). I think there's a legal limit of 26% or something. If they try to push for something like 20% AND a shorter term, then I'll consider that struggling too.

In any case, this isn't a deal set in stone, nor is my "conviction" to buying this car. I've set my limits of "comfortably" paying it and if the actual deal pushes too far where I'm not comfortable, I have enough sense of mind to say, "F-it, not worth it."

 

Your bank should have given you a reason why they denied you and if they didn't, ask them. That would have been a key thing to know. Very weird situation. Did you check your credit score on your own? It's good to go into the dealer armed with your score, good or bad. In fact, it's a must. And in this case, at least you know YOU can get info on yourself- like the fact that you exist in the world! Be careful the dealer isn't setting you up for a huge interest rate loan. Hope something works out for you. Good luck with all this.

Dan

 

The reason I think it's bizarre is because I can pull up my FICO score. I did the once a year directly with Experian once last year (but it's less than one year ago, so I can't pull it again) and then I got both Transunion and Equifax through myFICO.com (visited each one also from myFICO). I think my Experian's "Advantage" score was 720 or something, and I figured some people say that was "10% too high," so I considered it more like 650. TU and EQ on the other hand gave me 709 and 706 as of 4/22/10.

According to myFICO, a score of 706 or so should net something like 7.4% for a 36 month auto loan. But I'm not expecting that since my history is so young.

As for "why" the bank denied me, the first time I applied, I asked. They said there was something "derogatory" in my credit history. Which doesn't make sense to me. In everything I could find about my credit reports, the only two "negatives" I could find were too few credit lines and too young average credit line age. So, unless there's something Experian and myFICO aren't picking up, I have no idea what's going on.

About 6 years ago, when I lived in San Diego, I tried pulling my credit scores. But at that time, I couldn't get anything. Experian kept coming back at me with some error about searching for it. At the time, I just thought it was because I didn't have a credit card. When a Honda dealer couldn't find my info some 7 months ago, I thought my credit history was just to young to find since I only had the secured credit card for 8-9 months. But now, another 8 months and I'm having the same thing?

Something is up. I'm a glitch in the matrix!!!

 

Did you check creditkarma.com yet? It is absolutely free and has an in depth report card. It soft pulls from Transunion so it is an official FICO credit score.

I think something is up with that secured card. Where did you get it and who is the provider (VISA, MC, AMEX, Discover)? There is a possibility that it is not reporting your payments and are you charging at least 1 purchase a month and paying it off? Also, is the card considered a business credit card? Some business cards, like a few from American Express, don't report to credit bureaus (unless there's a collection).

 

I don't know if there's anything up with the secured card, but it does report, it is listed on my TU and Equifax reports (also shows that I pay on time). It's a secured card from Bank of America, my bank. I use it whenever I pump gas (except at Costco). Sometimes I use it for other things.

Well, time for "good news." The finance guy at Honda got me a lender with no cosigner! I was so excited that when I asked the sales guy about the APR, he told me he forgot to check with the finance guy about the APR, I let it go.

So, there's still potential for the deal to not work out... but it seems one of the hard parts are done (barring any surprises). The other hard parts are waiting for the car, and forking over the down payment!!!

 

That's good, just make sure you do see the APR on your loan by the time you sign for it, make sure they aren't charging you something crazy.

 

Keeping my fingers crossed.

This is how I feel...