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Was denied for an auto loan from my bank, what now?

Only have two years of credit history, little debt (one of my credit cards are 0% apr so I keep a small balance), FICO over 700, four lines, and have zero expenses (college student living with family). My income is over 15k a year, and will soon increase to around $20k a year.

Maybe I asked for too much? What size auto loan can I get approved for?

9 Comments

  1. Spock (rhp) says:

    pay cash.

    1. your expenses won’t stay so low forever, so the bank won’t consider that. They’ll assume ‘normal’ expenses.

    2. not much credit history — two years isn’t much.

    3. with an expensive car and loan comes expensive auto insurance, which you must buy. Cheap auto insurance is liability only because you own a used car that’s not worth insuring for collision/comprehensive. That’s the one you want. By used directly from a family that keeps repair records. At least ten years old but with mileage under 9,000 a year. They’re out there if you search for them.

  2. My Take on It says:

    You probably need a cosigner
    My daughter had over 700 credit 2 cards always paid off and still needed me to cosign.

  3. Timmy says:

    You didn’t say how much the auto loan you were looking at. I will answer your questions generically. If this is a new car loan, was the car discounted? Did you have a down payment? If the car was used, the bank will use a valuation to figure out how much it’s worth. For the sake of argument, let’s say the car is worth $10,000 and they use kelley blue book (KBB.com) for the valuation. If the dealer was trying to sell you the car for $12,000.00, the LTV (loan to value) would be 120%. Since you have newer credit and it sounds limited, banks and finance companies aren’t anxious to lend more than the value of the vehicle. Now, if the loan was 80% LTV or $8000.00, on a vehicle worth $10,000.00, they may have considered that. If I were you, I would ask to speak to the loan officer and find out why you were denied, and ask them under what terms would they accept a counter-offer from you. Since you said it’s “my bank” you have a relationship with them and they can discuss this with you. By the way, banks and finance companies are more likely to help if you have money in the deal, (or skin in the game.)You also may want to know if a co-applicant would help. With more information, I can give you a better idea of how to help you. I hope this was helpful to you. And, if you are making $15K annually, and you are looking for a $50K automobile, that is too much for your income and credit history. Good luck.

    Tim

  4. Jeff T says:

    You probabably can’t make more than about a $100 a month payment.

    That comes out to about a $4,000 car loan, assuming 48 months at 9%.

    What the bank’s worried about is the fact that you may not stay in college for the next four years.
    Then how will you be able to pay the loan making only $15K a year?

  5. Dan B says:

    You may have been denied the loan because of potential debt you are expected to incur in the future.

    You have no living expenses (rent/mortgage), utility payments, etc. Most people have these expenses, you don’t, but potentially will have. That can have an impact on your ability to handle your debt load during the term of the car loan.

    Save up some money and put down a sizable down payment. You would be viewed as less likely to walk away from a car that you have a sizable investment in.

    Your credit card payments PLUS car loan payments PLUS student loan payments should not exceed about 12% of your disposable income (income after taxes and mandatory withholding). So, with $15k, these payments should not exceed about $180 per month. That’s what the bank was probably looking at.

  6. Cash says:

    If possible try to arrange a co-signer. That way you might get the approval.

  7. Uday says:

    Your credit history is not much dense. In my opinion you requires to wait before applying for auto loan.
    some tips you may find useful
    Tip1: Do not apply until you complete 6 months in present job
    Tip2: Repair bad credit before applying auto loan
    Tip3: Wait until you live at current address for more than 6 months
    Tip4:Pay off all of your credit card balance
    Tip5: You should have stable job

  8. Laraine says:

    This site can solve your problem very fast: CREDIT-COMPARE.NET

  9. Gemma says:

    Here you can get rates: http://WWW.CREDIT-AND-FINANCE.COM , remember to compare before.

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