Getting a car loan

bballer10m · #1 (**permalink**) 10-25-2005, 10:25 AM

I am a 22 y/o working fulltime and going to school partime, last year i accumulated some debt and have recently paid off everything except my school loans. I paid off a personal loan for $3,000 two weeks ago My mom was the cosigner of that loan. I am trying to get a car loan through my mom. I have a steady income and can pay her until i can put it in my name.

She applied for a loan at the bank and got rejected. Her credit is over 700 i believe, about 720. Did the loan have anything to do with it?? if so, what can we or i do about it?

What if she applied agian through e-loan or something like taht. If she keeps applying will that hurt her chances of getting a loan? What about a bad interest loan for now and then refinance later. Can you give me some info or advice, thanks a lot...

sweeps · #2 (**permalink**) 10-25-2005, 10:34 AM

When your loan application is rejected, you're usually entitled to a free credit report and a brief explanation why the lender rejected the loan. Be sure to take advantage of that.

A 720 credit score is pretty good, but other criteria may have caused the rejection -- insufficient monthly income, for example. Was the personal loan paid regularly and on time? Also if you just paid the loan off 2 weeks ago, that may not have been reflected immediately on your mother's credit. Her outstanding loan balance may have still included that extra $3,000.

bballer10m · #3 (**permalink**) 10-25-2005, 10:37 AM

i should be getting a statement why it was rejected in a couple days. But were late a couple months over the past winter. Could she get a loan anywhere else? And refinance in the future?

sweeps · #4 (**permalink**) 10-25-2005, 10:48 AM

Sure, there are many places that will offer car loans to high-risk buyers. But the interest rate and the signing fees will be higher. Theoretically after a few years, if you improve your financial situation, you can refinance at a lower rate.

However, I get the feeling that you're leaving some stuff out. Is this car beyond your financial means? Have you saved anything for a down payment? Why is your mom cosigning these loans if you have a full-time job? Not trying to be nosy -- Just that the forum may be able to give you better advice if we have more details.

bballer10m · #5 (**permalink**) 10-25-2005, 10:57 AM

First off, my situation is that ive only had credit for a few years and have had been debt. my credit score is very poor, 585. I know i cant get a loan. But for the past 4-5 months i have been paying ontime and i went from about 5 grand in debt to zero just recently. When my score is good enought where i can refinance in my name i will do so. Until then my mom is helping me out. I make about 1500 a month, so a 300 dollar car payment with no debt isnt out of my means. Thats my situation.

As for my mom, she has her cars paid off, she is not cosigning, shes just signing in her name without me. She has a steady income making about 45-50k.

Russell · #6 (**permalink**) 10-25-2005, 11:17 AM

Just a suggestion - since you just paid off your old debt why take on new debt ? Do you really need a new car ? How about saving that $300 a month for 13 months and then buying a $4k car (a 97/98 civic, corolla, miata etc) ?

sweeps · #7 (**permalink**) 10-25-2005, 11:20 AM

Grats on paying off your debts, that's great news...

As to why your mom was rejected for the loan it's hard to say. Again, maybe her debt-to-income ratio is not favorable right now. Perhaps the bank was spooked by some factor in her credit history. Or it could be as simple as a clerical error on the loan application.

Before applying for a high interest rate loan, find out what went wrong with this one. There may be a simple explanation. Plus, applying for too many loans hurts your credit score, so it'll pay to find out how to fix the problem before applying for more.

bballer10m · #8 (**permalink**) 10-25-2005, 11:20 AM

I have been sharing a car with my brother and I would like a car that will last. I figured if i buy a car for about 14k i can pay it off in 4-5 years while I dont have a mortgage or anything. I figured this would be the best bet for my future.

Russell · #9 (**permalink**) 10-25-2005, 01:36 PM

What car are you planning to buy and what state are you in ? Since you're young the two best things you can do financially is to:

1. stay debt free
2. start saving money (401k, ROTH, etc)

I started contributing to my 401k when I was 24, I wish I had started sooner. I'm 30 now and believe me the last 3 yrs have just blown by so fast I can't believe I'm 30 already. You still have plenty of time just start saving money now

With that in mind, the cars I listed (add 94-97 Accord to the list too) earlier are all solid cars and are probably the most reliable, cheap to own and trouble free of any other cars in that price range (and even in much higher price ranges). They're probably better bets than buying even a lot of newer cars (unless you buy the newer models of the cars I listed).

Either way good luck.