Question about a car loan

bCzirr · #1 (**permalink**) 09-27-2009, 01:07 AM

Ok I got my first car loan from my local credit union about 4 months ago.

-It was for $3300
-My monthly payments are $160

Now I have a guy who wants to buy my car for $3500, I still owe about $2600 on the loan, I have only made like 4 payments so far.

I want to sell him my car and then pay off the loan. That part is easy. NOW the hard part, and where my question starts.

This loan is basically the only "credit" I have ever earned I am 20, and since I will be selling my car I want to buy a new car. I already have the car I want in mind and it is going to cost me $10,000 flat. What I am hoping to do is go back to the credit union I am currently a member at and apply for a new loan, but this time for lets say $8000 and then put $2000 down. I am worried that they will not approve me.

I was surprised that they approved my first loan because I had NO credit whatsoever. I am hoping they will see I was able to pay my first loan off in less than 5 months and approve me.

-I make about $1200/month im only minimum wage. I have been at my current jon for a year in november. I dont really mind how much I pay a month because I am not planning on paying minimum, im hoping for $250-$300. Anyways, do you think I will get approved?

-Thanks alot for the help.

sapphirecapital · #2 (**permalink**) 09-27-2009, 07:27 PM

a. talk to them first and let them run it
b. I personally would not take a 10000 for a car loan in your situation, because you are vulnerable to job loss and have no reserves

bCzirr · #3 (**permalink**) 09-28-2009, 01:31 AM

Well I need 8k not 10k. I am going to save up another 2K and get the loan for 8, then put the money and loan in my bank and go buy the car.

Vytautas · #4 (**permalink**) 09-29-2009, 04:54 PM

You should really consider whether spending $10,000 is worth it at your income level. You will get a poor rate due to your credit history and it will be quite a large portion of your income if you have any other expenses (rent, food, utilities, school). I would really only get a car at that price if you have other prospects right around the corner (promotion, done with school soon), even those can be rather unknowns and shouldn't be fully counted on.

bCzirr · #5 (**permalink**) 10-03-2009, 05:27 AM

Well turns out having no credit really hurts me. Nobody will approve my loan application. Looks like it's time to start getting some credit cards.

TheCaptain · #6 (**permalink**) 10-08-2009, 01:35 AM

It is great that you are able to sell the other car for a profit, although I would caution you against spending almost an entire years salary on a car. At 20 I wanted to put all of my money in to a car as well, but think about the true cost (the freedom and flexibility to go out, socialize, etc).

Debt_mgt · #7 (**permalink**) 10-27-2009, 07:55 PM

The only person that can answer your question as to whether or not they will approve you is your credit union representative. There are no set underwriting guidelines that all creditors follow. They are independent entities. That said, I would say that your chances of getting another loan should be pretty good. The fact that you repaid the other loan should be a positive, and the fact that you are putting 20% down works in your favor as well. More than likely, due to your limited (verifiable) income right now, you will be forced to extend the terms on the loan, and finance for a longer period of time to keep your debt to income ratio down. One variable that you didn’t mention is the age of the car you want to purchase. An older car might be difficult to finance and could play a part in your credit union’s decision. It may be that they are willing to give you another loan for more money, but not necessarily for the vehicle that you selected. Paying the car off quickly is a good idea, but you also need to start thinking now about long term savings and investing. It sounds like you are pretty good about putting money aside. At your age, retirement savings will go a long way down the road. I would suggest talking to your credit union about tax deferred retirement savings options while you are discussing the auto loan.

Dallas Dollars · #8 (**permalink**) 02-09-2010, 01:57 PM

You should reconsider! like stated in previous posts you wouldn't want to live outside your means.

BlackDiamond · #9 (**permalink**) 03-11-2010, 10:11 PM

Quote:

Originally Posted by bCzirr

Well turns out having no credit really hurts me. Nobody will approve my loan application. Looks like it's time to start getting some credit cards.

This is probably for the best. At 20, you really don't need a 10K car. What is wrong with the car you have? It sounds like it's holding it's value okay and working fine.

sussanesylvia · #10 (**permalink**) 06-11-2010, 03:42 AM

don't rush for such a huge amount for car loan. You need to have little reserves before you take any loan so that in case of any emergencies you have funds available with you.

littleroc02us · #11 (**permalink**) 06-11-2010, 04:35 PM

I think what a lot of people are missing here is that she thinks that the bank will lend her an unsecured loan for $8000 and she will use the $2000 for the downpayment while having no credit history. Good luck. There is no way I would do that as a lender. What I think they could do is loan you say around $5000 and you could put that all towards the car and then they will hold the title until you pay it off. There is no way they will do it the other way.

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