Q: Auto Loan with a 550 score?

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My friends car was just totaled, and she needs to get a new car FAST.

She has tried a loan from her bank and from people first but both declined.

Credit Score:
She has been told her score is around 550 by one of the decliners. Some of the outstanding balances she has never heard of and she believe she may be the victim of identity theft. She hadn't needed any credit for the past few years, so she hadn't checked it before now. Her income is 85K.

Any advice?

The specific question is: ANY ADVICE ON HOW TO GET AN AUTO LOAN WITH A 550 SCORE FOR A PERSON WHO MAKES 85K?

Before you do anything else, order a credit report online. If she was a victim, she needs to start correcting the problem right away.

I just stopped by to see what the post was that you deleted in Hot Deals.

She has ordered all reports online today, but still has the problem of no car (hence me posting the request and me driving her around <img src="i/expressions/face-icon-small-smile.gif"border=0>

If that unpaid balance isnt hers, concentrate on that first cuz its probably the worst offender on the credit report.

Get her a cheap rental. Enterprise usually is cheap for me, 9.99 a day if under 200 miles a day on their website oftentimes

first, thank her for not being me. second, rent a bunch of frankie avalon movies.

.

.

She is 24 so renting a car is too much $$$.

Crazytree, I did what you said and got punched.

Any other suggestions? Looking at these responses it would appear that she may be S.O.L.?

What's the problem? You just said she makes $85k. Tell her to call up Enterprise and rent their most expensive car. The cost shouldn't be a problem for her since she's making that much money.

Synk,

Maybe there are some members of the forum interested in helping others, even if they make a good living.

I do very well myself but still participate extensively in hot deals forum. Anyone can be frugal.

-shopper

Has she considered buying a $3k or $4k car with cash? That should get her by until she gets her credit straightened out, or gets some money from insurance.

What I am going to say here is probably going to stun some people here: 550 is not bad for an autoloan!

A friend of mine, with score of 545 or something and only $2,000 down, was able to get in a $18K car.

Here is the trick he used: Went to the dealer and checked out the car he liked. A used one. Told the sales guy right away, that look, my credit is bad and I have been approved for a 15% loan over 6 years, what can you guys do? He thought for a second and said, he will be right back. Before even the test drive. Came back and said, let's run your credit and our finance department thinks they can do better than that! The key was that he told everything about his credit and his potential score. Went for a test drive and came back and the finance guy was able to work out a deal for him. He got 13% over 6 years with $2K down.

Yes, it is high and it is a long term, but he intends to pay it off faster and it helps him establish the credit again. For him, the cost was worth getting the car and having the credit established. Btw, he didn't have an offer of the 15%. He just made that up.

Car Dealers are keen to sell you a car, but the trick is to let them know that you have been qualified by someone else. They want the financing business since there is a lot of money in that. And they love people with bad credit cause they can charge them premium rates.

And of course, do Lending Tree or something like that before you go. Cause they will see the "inquiry" on the report and know that you aren't bluffing. If there is no inquiry, they know you are bluffing and will call you on that. <img src="i/expressions/face-icon-small-smile.gif"border=0>

Edit: New cars are even better btw..like a 2002..they want to get rid of those cars.
If the car is totalled, doesn't she have insurance??? I mean at $85K, shouldn't she have that coverage even if it was un-insured motorist??? <img src="i/expressions/face-icon-small-wink.gif"border=0>

Oh, I'm sorry, I didn't know you were actually serious. Perhaps she should reconsider buying a car if she's trying to be frugal. I would suggest walking or biking if she lives in an area with a nice climate. If not, then I would suggest taking the bus or finding a friend to carpool with with--in fact, isn't that what she's doing now? Carpooling with you is probably the most efficient and environment friendly solution. You could always suggest that she split the cost of gas and maintenance with you. This way you both save a little bit of money.

theshopper said:

<< Synk,

Maybe there are some members of the forum interested in helping others, even if they make a good living.

I do very well myself but still participate extensively in hot deals forum. Anyone can be frugal.

-shopper
>>


I just love how everyone wants to offer life advice instead of answering the question....

--- How about you quit your job. Then you won't need a car. Problem solved.
--- Try Yoga and TM, imagine yourself in a new car.

(of course all those are better options than buying a car at 13%.)

What are you talking about? His original question was, "Any advice?" He asked an open ended question, so we offer open ended answers.

Thank you to those who tried to help. The used car and the rental were the two best ideas I had thought of. Unfortunately the rates are insane for under 25 in Florida. I thought of renting a car myself (found a $110/week Grand Am) but couldn't comfortably let her drive my car around (don't worry, I've learned my lesson and won't dare say what I drive).

No-thank-you to all the smartassses for turning the thread into a joke. I guess you all got confused by the complex title. In response to your posts, I scolded her for making too much and then laughed at her for not having at least 20k laying around. She thanked me for the help. Obviously only destitute members are worthy of consideration.

For those interested, it looks like she is going to buy a cheap car and save to buy a better one with cash or after fixing the credit issues (which appears to be time intensive according to www.creditnet.com).

If she needs a new car now but can't get a loan, how about having somebody co-sign for the loan?

But probably getting a cheap used car now is better until she gets her credit problems cleared up.

I must admit though, for somebody who has an income of 85k and no unsecured debt apparently, since she hasn't needed credit for a couple years, it is kind of surprising she doesn't have somthing put away for an emergency situation like this...not necessarily 20k, but certainly enough to get a used car quickly.

wildviper said:

<< For him, the cost was worth getting the car and having the credit established. Btw, he didn't have an offer of the 15%. He just made that up >>

He should have waited to see what rate they offered first, then negotiated

I have read that the used car market is very soft b/c of all the 0% offers for new cars these days. She should be able to negotiate a very good used car deal.

Someone correct me if I'm wrong. If she dispute the bad items on her credit report they will not calculate into her credit score. It should increase her score long enough for her to apply for a loan. This may not work if they get her actual report instead of just a score for instant approval. She can do a dispute online with each of the credit reporting agencies.

Correct. At least with Equifax, any dispute will not bee seen as far as the FICO score goes -- if you wait till the next day. If someone actually looks at the CR then there could be problems............

shortt23 said:

<< Someone correct me if I'm wrong. If she dispute the bad items on her credit report they will not calculate into her credit score. It should increase her score long enough for her to apply for a loan. This may not work if they get her actual report instead of just a score for instant approval. She can do a dispute online with each of the credit reporting agencies. >>



zapy said Correct. At least with Equifax, any dispute will not bee seen as far as the FICO score goes -- if you wait till the next day. If someone actually looks at the CR then there could be problems............

Whoa! Really? Isn't that the biggest loophole there is then? What is going to stop someone from disputting everything bad and going to a lender next day who uses Equifax and applying for a loan or a credit card???

Please explain this to me. <img src="i/expressions/face-icon-small-smile.gif"border=0>

I have a real problem with the idea that someone making $85,000 a year:

1. Has zero savings (including holdings or an IRA).
2. Has zero open lines of credit.
3. Hasn't checked her credit record for "years".
4. Does not have a mortgage that would have been affected by her 550 credit score.

Did your friend have insurance on her vehicle? I assume it was a nice car if she's making 85K. The quickest solution is to buy a cheap used car for the time being and saving up some of her paycheck. She should have some cash laying around with 85K/year income

#5 was supposed to be the insurance one, but I lost my train of thought.

Dear lord!

Thank most of you for your pointless and meaningless rants about how confused you are about a person who makes 85k per year needing a loan.

GET OVER IT! Answer the question or don't answer at all.

1) I hate to tell you, but $85k isn't THAT amazing
2) You may find it unbelievable, but even people with money like leveraging hard assets. This frees up money for things like aggressive savings.
3) Pulling money from many savings plans means PENALTIES
4) The question is: ANY ADVICE ON HOW TO GET AN AUTO LOAN WITH A 550 SCORE FOR A PERSON WHO MAKES 85K?

The biggest problem is that credit score. Get that fixed if the information is wrong. That will help in getting a loan.

If she can't wait that long, then bite the bullet, pay the penalties and withdraw from savings to get a car. If you are saving long term, you hope to never withdraw the money unless it is an emergency. So does this qualify as an emergency? If so, then use that money. It seems pretty simple, but if I am missing something here, then please enlighten me.

LegendOfCheap:

That is exactly what she is going to do unless someone recommends a good loan poss.

Thanks.

No advice right now, but I'll think on it... OK, I thought about it. She may qualify for a hardship loan through her 401(k), could borrow the money from cash value life insurance (her parents might have bought it for her and she might have forgot about it), use her other marketable assets as colateral and borrow against them (ie. stocks, mutual funds, etc.) Assuming you have a better score, you buy the car, borrow the money, and have her pay you plus a little more for your trouble, until she gets on her feet (I've done this many times before for cars and properties and made a tighty little sum).

Going by the age, she probably doesn't have enough in funds or 401(k), and the Life insurance would only be by luck... so my suggestion is you get the car and loan on your score and loan/sell it back to her. I'm sure she's credit worthy, otherwise you wouldn't be expecting her to qualify for a loan.

Good luck and watch that you don't get caught charging usury rates for her loan.

See if she or anyone in her family belongs to a credit union where they can sponser her in as a new member-they usually have lower standards and rates then a normal bank. Any car dealer will sell her a car, she will pay a higher rate then is normal for that credit score. A person who declares bankruptcy can get a car loan...the rate will just be higher (Ex.21%)-look in the local paper and you'll see car dealer ads saying bad credit no problem!

To fix the credit, order all three credit reports and challenge/dispute all bad credit references and wait for results within 30 days. Anything remaining, contact companies directly to deal with ID fraud issues.

I'm assuming that your friend tried to buy a high-line marque like a BMW, Acura or Lexus. Banks typically finance big money higher-end cars on only the best credit. As I recall learning 'oh-so-many-summers-ago' they don't need to sell cars to just anybody. That's the domestics car-dealers job.

The bottom line is that YOUR FRIEND IS TRYING TO FINANCE TOO MUCH CAR WITH HER (CURRENT) CREDIT SCORE and little money down. Or she's trying to lease with no-low money down. Typically, you need BETTER credit to lease a car than to purchase. Tell her to stop looking at that $32K BMW 330ci and tell her to start looking at that $16K Mini-Cooper.

This is how your friend can get into a car with her current credit. That is, if she wasn't willing to wait to TRY and resolve some of the credit problems she's having (which is what I would advise). If she can put MORE MONEY DOWN, the dealership will finance her. Period. Granted, it will be at a shitty rate, but they will do it. Tell her to borrow $5-10k from her parents or siblings. That will make the deal work.

However, the end result of this scenario will be, if purchasing, a very high-APR. So in this case, it might be smarter to go with a negotiated lease.

Best scenario - friend rents car, clears credit, THEN purchases
Second best - friend borrows $$$, leases car
Third best - friend rents car, clears as much credit as she can, borrows $$$, THEN purchases cheaper car

In the current situation, her credit history is BAD (550) and SHORT (she's only 24).

theshopper said:

<< The question is: ANY ADVICE ON HOW TO GET AN AUTO LOAN WITH A 550 SCORE FOR A PERSON WHO MAKES 85K? >>

What was the question ?



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