Car loan with low Credit score

[kimpierce8]

I have a credit score of 590, and need to apply for an auto loan and am wondering my chances of being approved. My credit is low mostly because lack there of credit, but I do have a few late payments that helped to lower it, I also have a student loan that is helping to build it. My dilemma is that I cannot wait until it is higher to purchase a car. A little over a year ago I purchased a used car for 10,000 the car has cost me atleast 200 a month in parts and work for the past 6 months, and now is on its last leg. Its an 06 passat that loves to leave my two boys and i stranded. I need to purchase a reliable car. Im looking to get a loan of 15,000 or less and was just wondering if anyone has had any experience in this area it would greatly help me out!

Thanks, Kim

 

[kimpierce8]

Really wanting some input before I go and get denied on a loan and further depreciate my credit! Although I am currently running out of options

 

[Sephire]

Buy a new car like a Nissan Versa (based on your price point) and you can stop worrying about repairs and upkeep for several years (covered warranty).

 

[who?]

Here are pictures of the cheapest cars to own: http://www.forbes.com/pictures/ehmk45mgke/subcompact-car-chevrolet-spark/

 

[thecoolnessrune]

OP, if you're simply wanting statistics, then you being a sub-prime borrower (credit score less than 620) puts you at a roughly 45-50% approval rate. If you get approved, expect your loan to be >10%.

You can of course, help your odds by keeping your loan amount as small as possible. You'll also more than likely need to put at least 10% down, and most likely they will request more to give you decent chances.

What I would do, is as Sephire said, go for a Nissan Versa. New cars have lower interest rates than used cars. I would call around and ask at Nissan dealerships to see if they have any leftover NEW 2014 Versas on the lot. These should be discounted since the 15's have been on the lots for a while. If they do, I don't see any reason why you can't haggle down to 10K TTL included if you stand your ground. If you can deposit 2K (20%), even at your subprime rate, you would likely get approved. You can expect to get approved at around 14-16% APR, according to February's national rates.

EDIT

Also, in my area, there's leftover 2014 Chevrolet Sparks in manual for $9,000. You could probably talk them down even less than that. You can definitely get a new car for <$10,000 if you can find a leftover 2014 near you.

 

[Vdubchaos]

Make sure you inspect the car before purchasing.
Make sure you hire independent mechanic to do so as well.
Make sure you see ALL service records (especially Oil changes, don't trust CarFax). Life of the engine/reliability is dependent on the maintenance of the car.....

And for god's sake, don't buy a VW or ANY German car outside of warranty period.

As for loans, make sure you have at least 10% and bring someone that has experience dealing with used car salesmen....the other choice you have is sub prime loans, but I wouldn't touch those loans, or salesman that use them with a 100 foot pole.

 

[Bock]

How much you can put down & income matter just as much as credit score. If you can't make a sizeable down payment, check craigslist for used car lots. It's usually a bad deal, i.e. $9k car sold to you @ $10.5k with 16% or higher interest. Then the funny math starts, that $500 down they advertised, well, if the loan co. calls, you should tell them what the paperwork says & not the actual down payment. For example, buyers order says you put $2100 down but it was only $500, they just inflated the cost of the car to offset. Mess up & tell the loan co the truth, kiss your car & your DP goodbye.

Edit: I should add, make more than 2k/mo take home. Anything less isn't going to work.

 

[mrjminer]

590 sounds pretty low. You have more than a few missed payments or something, I'm presuming? Unless you have a decent income, you might have an issue getting a car without a co-signer. Car dealers will approve anything they can, though, so you might be ok

If you can get one, just get a Honda Fit, Toyota Yaris, or Ford Fiesta. Three reliable low-cost cars.

 

[Tweak155]

I've read that leasing is generally a little easier to get approved for if you go with brand new low cost car (such as a Fiesta or Nissan as suggested earlier). The payments should be a little lower and it gives you a few years to build up some more credit and then buy.

 

[Rakehellion]

Migh have to go to a shady used car salesman. One of those "No credit? No problem!" places. They make most of their money in repos.

But since you know your credit history, you can talk to the creditor in person and ask them your chances of being approved for the loan. Don't go to a bank.

 

[highland145]

Migh have to go to a shady used car salesman. One of those "No credit? No problem!" places. They make most of their money in repos.

And 50% increase over the wholesale price.
And the high down payments, especially this time of year. EITC, ftw.
And the 28% financing.

 

[waggy]

And 50% increase over the wholesale price.
And the high down payments, especially this time of year. EITC, ftw.
And the 28% financing.

meh. then people should have taken care of there credit.

My Sister-in-law goes to these places. in 6-8 months the car is "turned in" because it has mechanical issues...lol

OP do as others said. the cars listed are cheap but not terrible.

 

[highland145]

meh. then people should have taken care of there credit.

My Sister-in-law goes to these places. in 6-8 months the car is "turned in" because it has mechanical issues...lol

True. I was just pointing out that repo's aren't the only place they make their $$.

Used to love......those. "I'm going to let you have your car back. It's on I-20. I think the engine is broke."

 

[Vdubchaos]

And 50% increase over the wholesale price.
And the high down payments, especially this time of year. EITC, ftw.
And the 28% financing.

Many of them have devices that disable your car remotely at a push of a button when you don't make a payment.

 

[highland145]

Many of them have devices that disable your car remotely at a push of a button when you don't make a payment.

Quickest way to get back on your feet, miss a payment.

 

[smackababy]

And 50% increase over the wholesale price.
And the high down payments, especially this time of year. EITC, ftw.
And the 28% financing.

It is sad a lot of places do that and take advantage of young military members. I would see it all the time. 18-19 year old kid just out of boot camp and their first steady paycheck, but zero credit history. "Hmm, I can afford 28%." And they drive off with a decent car.

 

[highland145]

It is sad a lot of places do that and take advantage of young military members. I would see it all the time. 18-19 year old kid just out of boot camp and their first steady paycheck, but zero credit history. "Hmm, I can afford 28%." And they drive off with a decent car.

They've banned a lot of places from being around bases, right? And the military needs to step up, if they aren't, and give these people some financial counseling. But then again, no one gives young people financial counseling unless their parents do.

 

[Vdubchaos]

Subprime car loans are all well and thriving.

Just waiting for that bubble to burst.....

 

[smackababy]

They've banned a lot of places from being around bases, right? And the military needs to step up, if they aren't, and give these people some financial counseling. But then again, no one gives young people financial counseling unless their parents do.

You can ban them from the immediate area, but not the entire city. And, there are 3 things that are sure to be right outside every military base: a liquor store, a payday loan office, and a dry cleaners.

 

[lupi]

Sounds like you first car purchase was a bad selection. Would make sure the next one isn't.

 

[SlitheryDee]

When I bought the car before the one I have now, my credit score was probably close to that. My grandfather offered to use a CD he had with his bank as collateral to ensure my approval and get my interest rates down. I took that offer and bought a Chevrolet Aveo for ~$10,000, which I drove for the next 7 years. It was kind of a shit car to drive, but it was great on gas and held up surprisingly well. I bought a much better vehicle this month though, and I didn't need his help to do it.

If you have anyone who is willing to do something like that for you, you can probably get approved and get a decent interest rate. If not, you're going to get a bad interest rate. In that case I suppose I would try to get the most affordable note I could and console myself with the thought that by the time I had it paid off my credit score would probably be much better.

 

[highland145]

If you have anyone who is willing to do something like that for you, you can probably get approved and get a decent interest rate. If not, you're going to get a bad interest rate. In that case I suppose I would try to get the most affordable note I could and console myself with the thought that by the time I had it paid off my credit score would probably be much better.

Just make sure they report else it's not going to help.

 

[monkeydelmagico]

Your gonna get hosed. Sell the passat and buy a well used buick regal or ford crown vic with cash.

 

[smackababy]

Your gonna get hosed. Sell the passat and buy a well used buick regal or ford crown vic with cash.

Depending on where he lives, that might be difficult. I know in some parts of the country (South), getting a Capris or Crown Vic on the cheap is hard because a bunch of idiots want it to put big, goofy ass wheels on it. Donks are terrible and their owners should be punished.

 

[Metron]

Two suggestions...
1. If ex-military (or family of military), USAA offers incredible deals to members.
2. Capital One auto finance specifically targets people in your situation. I was in your situation about 10 years ago, and they gave me a very competitive interest rate (8%) on a USED car. You can pre-apply and get approved for a target amount or a particular model of car, before you walk into a dealer.

Negotiate your price, sign, get to the finance guy, and then drop the bomb that you already have a loan approved at x% rate... he may be able to get you a better deal (likely not given your situation).

Don't reveal that you have pre-approved outside financing until you get to the Finance guy, since dealers usually count on making money on the financing side as well.

Good luck!