Need serious help on auto loan. Please!!

When I got another car (slightly used, 2 yrs old, low miles, great car!), the dealership shopped for financing for me. At that time my credit wasn't so good. i don't know what my score was at the time, but they had to go through many places but finally found one, probably the only one who would take me then. But I think dealers will somehow make it happen.

Also, it is my understanding that when you are shopping around for a mortgage (and maybe an auto loan falls into this too, not sure) that all of those inquiries are consider only 1 inquiry, if they are all done within about a 2 week time period. It is looked at as "shopping for the best deal", so it's best to do this all close to each other, rather than spaced apart in time.

PS. I have been paying a very high %age rate on my car loan for 2 yrs now. I want to refinance, esp. since my FICO score is much better, but I hope to buy a house, so I don't want to refinace until after then, or at the same time (maybe I can get the car loan wrapped into a mortgage and have 1 bill) The company I am financing with now doesn't offer lower rates to anyone no matter what - they have 1 rate for all and it's high. But I got this fantastic car!)

I would say get what you can through a dealership, make good payments over at least 1 yr, and hopefully your scores can improve even more too in that time, and then seek refinancing at a lower rate. If that will be too hard, maybe consider a lesser car for a more affordable payment plan?

Any other thoughts from others?

 

With low scores and a recent repo, you will not look good to the better auto lenders. As you have noted, you are attractive to the bottom feeders, some of whom would just as soon do a loan at high rates, tack on a bunch of fees up front, collect a few payments, and repo anyway, still making money.

 

I agree with ontrack's post. If you had a repo before, and now can only get offers by the bottom feeders, there is a good chance that could happen again. Be careful not to bite off more than you can chew. If you really feel you can make those payments for a year, and you can keep other payments good for a year, overall improving your situation, you may be able to move into a better financing situation in a year. If you realistically don't think you can do this, don't.

If this won't work, you may have to adjust your plan to include less of a car without buying a money pit that will hurt you too. If you get any car, make sure you can live the payments. Even if the interest rate is high, if that's all you can do for now, just be sure you can make the payments, and work into a better interest rate later.

 

You may be well served trying to get financed through a local credit union. Unlike many large banks, the loan consultant at a credit often has far more autonomy and can make 'common sense' underwriting decisions. That allows them to use compensating factors like your income to off-set the negative standing of a repo or poor credit. They will also often discuss a potential loan before looking at your credit saving you even more inquiries

As an aside; Suzie46 is dead on in saying that inquiries for mortgages within 14 days of one another are grouped together and counted as only one inquiry in the calculation of your credit score. Inquiries are counted against your score (according to a Fair Issac rep I cornered) because of two reasons--first it was statistically found that people with more inquiries were more likely to get a 90 day delinquency (which is what your FICO score really tries to measure), and second because they were viewed as attempts to obtain additional credit and the new credit was too new to evaluate and therefore may be negative. The mortgage lending industry associations petitioned the bureaus, and requested that their inquiries be counted as one as it was very unlikely that any consumer would be purchasing multiple homes before they could be evaluated on the credit report by other lenders. The agreement was that there would be a 14 day grouping of mortgage related inquiries and that any inquiry within 30 days of the date your credit report was pulled would not be counted against your score (30 day inquiry moratorium).

Auto loans in principle are meant to work the same way, but due to the way they report this is not always the case. As part of the agreement with your credit report provider, any company pulling credit reports must disclose which of the legally allowed permissible purposes they are pulling the report under (this is also a great way to dispute inquiries based on permissible purpose). Car dealerships do not always sign up under the correct permissible purpose, and if they are not using the auto loan financing permissible purpose the inquiry will not be grouped for credit scoring.