Car loan advice -- attention bankers, auto dealers, finance people

[SUNreporter]

Consider this a shout out for advice from anyone who worked in the used car business, was a banker or loan officer, or knows how the game is played. My son needs a car. Has limited credit history. A 620 score. Earns about $20,000. Been at his job 2 years. Has a couple of credit cards that are current, no late pays. Pays $300 rent. His bank doesn't seem interested in loaning him money, and a few dealerships he visited haven't been able to get him approved. Where should he go? What should he do? He doesn't belong to a credit union, but he can put $1,000 down. How does one find a dealer who can make subprime financing happen? Also, should he apply at a number of dealers, or will multiple applications bring down his credit score? He figures he should quality for a $10,000 car (he can handle payments in the $275 range). He expects to pay 13-14%, but can't seem to find the real dealer. Any advice would be greatly appreciated.

[hoganth]

Although I am retired from the car business, my advice would be that.
for subprime car loans a substantial amount of cash needs to be put down.
somewhere in the 30 - 35 % range. i.e. $10,000.00 car would be $3-4,000 for down payment. It sucks but that's kind of the way it is nowadays.
Watch out for the "Buy Here, Pay Here" lots as they are max on the interest rates and hoping that one will miss a payment so they can perhaps reposess.

[SABRMnLgs]

I'm just a novice on this thread but why does he need to get his car from a dealer? Could he not get a personal loan or something like that and buy from a reputable friend or acquaintance?

[SUNreporter]

Thanks for the replies. His bank acted like they weren't loaning to anyone unless they had sparkling credit. Wonder if some place like Wells Fargo is the way to go?

[Indy-Guy]

I have retired from the Automobile business after 35 years.

I would try Carmax and see if they would be able to help. Also perhaps if you as a parent would be willing to co-sign that may help perhaps through your bank or through dealer arranged financing. If you co-sign be sure that his name is first and yours is second on the contract. This will make the credit to his name. Also be aware that as a co-signer that your credit report will show it as a debt and could limit your buying power. Also as a co-signer you are responsible if your son defaults on the loan.

Dealer financing will be perhaps better than for your son to go to the bank himself since the dealer will work to get the deal done because they will make money when they sell the car and on the financing as well. If they don't get the financing done then they won't make anything. If there is a way to get the deal financed the dealer will find it. Down the road when your son builds his own credit and the credit market is different than it is today he will be able to walk into the bank and do better than dealer financing. In better times dealers many times had better financing than the banks offered their own customers

I did business with JD Byrider back in Indiana and they are good people to do business with and have lots in Florida and around the country. I did business with their corporate stores and not the franchise stores. I would reccomend the corporate stores and not the franchise stores. JD Byrider does report to the credit bureaus where most by here pay here lots do not.

http://www.jdbyrider.com/Florida/used-car-dealer

As for financing through GMAC, Chrysler Credit, or Ford Motor Credit I understand that if peoples credit isn't solid gold they won't make the loan. Honda Credit and Toyota Credit many not be as strick and the others are today.

[thegreenerside]

This is my thought and what I would tell my child in the same situation. You are making $20k a year (I am assuming gross) which is about $1650 per month or a bring home pay of roughly $1200 per month. You can not afford to go out and buy a car and make payments. Even if you were able to get a loan $250 is probably the maximum you could pay per month and then there is the issue of full coverage insurance which very well could be equal to if not more than the actual car payment.

So here is the equation

1200 approx bring home income - 300 rent - 100 utilities (including cell phone) -250 car payment - 200 insurance (depending on driving record, state, age, and credit score) = $350 for food, gas, and other misc expenses.

My suggestion is for this young man go out and buy a $1500 car with his $1000 down and with another $500 saved. This won't be a pretty car, but it will get him from point A to point B.

This is my opinion and while I am not an expert on money and without all the details other than what you have mentioned and a few of what I am guessing your son can not afford to finance a car. Even if you went and co-signed the odds of your son being able to get by are very slim and could put you in a very stressed situation.

[TunaFish]

Might want to join a credit union. At least call and talk to someone there. That's how I got my first car many,many years ago.