I have a decent credit score (650-700), lived at my resident long enough, been at my job long enough (almost 2 years) and make more than enough money to get a loan. I have paid on the car for 7 months on a 6 year loan. The interest rate is over 20% right now and have an excellent payment history on all my accounts/credit cards. So far, most reputable financing companies have rejected me online. I will soon go to banks and credit unions. Any suggestions?
2006-11-23 17:34:08 · 7 answers · asked by Anonymous in Business & Finance ➔ Credit
Your best bet is to go to a credit union first- they tend to be more lenient and offer better rates, usually. What you are describing about your situation does not add up at all. If you really have 650-700 for a score, been at your residence for 3 years, had a STABLE employment history for at least 2 years and make more than enough money- you sould have a much lower interest rate.
Remember, there are 3 credit report bureaus and not all of them have the same information as the next. Experian may not have the same information as Transunion or Equifax, which may lower or raise your credit score, depending what is on it. You may have 650 for a score on Equifax, but on Transunion you may have 525 for a score because of an old debt that you never paid off and that just so happens to be the credit bureau that your lender uses in making their credit decisions. You should be able to ask your lender which bureau they use.
I suggest you pull all 3 reports and look to see what exactly is on there.
Just an FYI- it usually does not matter at all whether or not you are upside-down on a car loan. What really does matter is your credit worthiness and debt-to-income ratio. Most lenders do not like to see your car payment higher than 1/5th or 1/6th of your monthly income and your total debt (house, car, credit cards, loans and even co-signed loans) should never be more than 50% of your disposable income. Try to shoot for 30 to 40% for best outcome.
Hope this helps!
2006-11-25 19:39:33 · answer #1 · answered by KJ 1 · 1⤊ 0⤋
First of all, it appears that you have been applying all over the place to various companies to get refinanced. Every time you do this, they run hard inquiries on your credit profile and each of those inquiries causes your credit score to go down. If you've done many of these applications then your credit score is likely to be a lot lower now than the range you quoted. Each lender that you apply to will be able to see that you've been applying to all these other places for credit and that you've been declined. That will raise a red flag and cause them to decline you also. The other thing you should realize is that you recently financed a car at a 20% interest rate and the loan is only 7 months old. This and the depreciation means you are way upside down in that car right now and owe the original lender far more than what the car is worth. It is unlikely that any lender is going to touch that loan. There is too much negative equity because you haven't been paying on the car long enough. I also don't understand why you took a 20% interest rate on an auto loan when you have such decent credit scores. Hopefully you realize that you could have done much better than 20%. Did you shop around before accepting that financing offer? I'm afraid you've put yourself in a tough situation by buying that car. The banks and credit unions all now have more strict requirements for loan applications, and the fact that you now have all those other inquiries on your credit will not work in your favor if you apply with them to get a loan right now. I suggest that you stop applying for more credit for the time being and give your credit some time to recover from all these inquiries. Sell the car and use the cash to pay off the loan early and start over with a cheaper used car. Hopefully there are no prepayment penalties on this loan, but given the shady person that the car dealer obviously is, it probably does. Sorry to have to tell you this but that dealer gave you the royal screw.
2016-05-22 21:44:02 · answer #2 · answered by Anonymous · 0⤊ 0⤋
1
2016-09-27 19:50:08 · answer #3 · answered by Corinne 3 · 0⤊ 0⤋
The 20% loan is way too high for someone of your credit score. Something is "wrong" for you to be rejected.
While car loans will naturally have a higher interest rate due to the poor quality of the collateral (used cars do not retain value very well), you should be able to do much better at any bank. You should be getting a loan somewhere near 8%. If you have a sizeable deposit at your bank, you might even do better.
2006-11-23 17:38:54 · answer #4 · answered by csanda 6 · 0⤊ 1⤋
because you are probably "upside-down" on the loan, which means you owe more the car is worth.
Start putting more towards the principle of the loan to lower the amount of interest paid. If you make a $1000 payment and you owe $300, put a note with your check to indicate the extra $700 goes towards principle. Also, contact them to see how they handle overpayments to be sure.
My brother pays his 7 year loan twice a month and he is slated to end in 37 months, saving him about $6200.
2006-11-24 19:27:00 · answer #5 · answered by Joe S 6 · 0⤊ 0⤋
hi
2006-11-23 17:55:17 · answer #6 · answered by Anonymous · 0⤊ 1⤋
you should never go for such a high rate. try a few loan companies offline it will surely help
2006-11-24 01:53:54 · answer #7 · answered by Anonymous · 0⤊ 1⤋