roy2ohio

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Member Since: December 2012

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Estimate amount of loan I will be approved for based on credit score.

Mar 10, 2014
More than just your credit score.
Helpful to 71 out of 78 people

Your credit score IS a big part of getting a bank approval. 

If your FICO is 700 or higher, you're gold.

If your FICO is 640 to 699, you're silver.

If your FICO is 600 to 639, you're bronze.

If your FICO is under 600, you're pretty much lead.

Regardless where your FICO falls, there are four (4) other things that will determine the amount of your loan.  The first would be your income and job history.  The second would be cash down.  The third would be cash down.  The fourth would be cash down.

The more of #2, #3, and #4 you can do, the better the odds.  This is going to hold especially true if you're young looking at cars over $29K or if your score is marginal. 

As far as estimating what you can get approved for?  You can do that yourself.  You can get a pretty good estimate by following the "Rule of 18" based on what you feel is a comfortable monthly payment.  Let me explain.

You decide you can comfortably afford a payment of $450/month.

Take your $450 and divide by 18.  That gives you 25.  Multiply that 25 * 1000  = 25000, or in other words, $25,000

So, in order to get to a payment of $450, you can't finance an amount greater than $25,000.  Now, keep in mind this total includes sales tax, title and dealer fees.  So you would be safe to back $2500 out of that total.  Meaning, the car you are negotiating would cost you $23,500 plus tax/title/fees.

What's the maximum amount of monthly payment you can afford based on your income?  Banks like to see 15% or less of your gross monthly pay as a car payment.  So if you gross $4,000/mo. pay,  a comfortable payment should be under $600 per month.

Another thing will be the car you are considering.  Cars with good, high rebates are more easily bought by banks than cars offering no factory incentives. 

Do your homework before going car shopping.

Avoid these mistakes:  http://themoparman.com/Car_Buying_Mistakes_.php

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Estimate amount of loan I will be approved for based on credit score.

Mar 10, 2014
More than just your credit score.
Helpful to 71 out of 78 people

Your credit score IS a big part of getting a bank approval. 

If your FICO is 700 or higher, you're gold.

If your FICO is 640 to 699, you're silver.

If your FICO is 600 to 639, you're bronze.

If your FICO is under 600, you're pretty much lead.

Regardless where your FICO falls, there are four (4) other things that will determine the amount of your loan.  The first would be your income and job history.  The second would be cash down.  The third would be cash down.  The fourth would be cash down.

The more of #2, #3, and #4 you can do, the better the odds.  This is going to hold especially true if you're young looking at cars over $29K or if your score is marginal. 

As far as estimating what you can get approved for?  You can do that yourself.  You can get a pretty good estimate by following the "Rule of 18" based on what you feel is a comfortable monthly payment.  Let me explain.

You decide you can comfortably afford a payment of $450/month.

Take your $450 and divide by 18.  That gives you 25.  Multiply that 25 * 1000  = 25000, or in other words, $25,000

So, in order to get to a payment of $450, you can't finance an amount greater than $25,000.  Now, keep in mind this total includes sales tax, title and dealer fees.  So you would be safe to back $2500 out of that total.  Meaning, the car you are negotiating would cost you $23,500 plus tax/title/fees.

What's the maximum amount of monthly payment you can afford based on your income?  Banks like to see 15% or less of your gross monthly pay as a car payment.  So if you gross $4,000/mo. pay,  a comfortable payment should be under $600 per month.

Another thing will be the car you are considering.  Cars with good, high rebates are more easily bought by banks than cars offering no factory incentives. 

Do your homework before going car shopping.

Avoid these mistakes:  http://themoparman.com/Car_Buying_Mistakes_.php

If I am a co-signer on my daughters car - will that happer me buying a new car

Mar 10, 2014
Will it affect your credit rating?
Helpful to 16 out of 16 people

In a word?  Absolutely!

Rule #1:  Never, ever cosign a loan for anybody.  Unfortunately, us moms and dads have a certain obligation to our children.  This is one time when each of us has to bite the bullet to get our kids on their credit path.  Let's face it.  I could have never purchased my first car without my dad.  And, there is going to be that time when I have to repay that favor to my son when the time comes.

Actually, there is no such thing as a co-signer anymore.  Now it's "Co-Owner".  And just as the term states, you own that car as much as your daughter.  When she makes the payments, you get credit on your credit report.  If she falls behind, your credit suffers, too.

Will it keep you from buying a new car yourself?  It depends.  If you are currently financing your car and you trade the car in, the answer is "No".  You should have no problem here.

If you currently have no car loan out and are looking to finance a new car, then the answer is "Possibly".  It will depend strictly on your personal situation, but odds are, you have a 90% chance of getting approved with NO problems.  So, unless your daughter has car payments of $800 or $900 per month, I wouldn't worry too much about this situation.

If you have a current car loan and plan on keeping that car, then the answer is "Quite Possible"  Most incomes will prohibit banks from allowing borrowers to carry 3 car loans.  (Remember, your daughters loan counts as one car loan).  You would have to have an income high enough to substantiate a 3rd payment, and a very good credit history to prove you can handle a third car.   It's not impossible, just unlikely.

If you think you're riding on the edge, then it's a good idea to have money to put down.  I advise enough to at least cover your tax, title and fees as those particular items do not add to the value of whatever you are buying.

Lastly, keep in mind that you do not have to be on your daughters loan for the entire 6 years.  As she makes her payments and obtains additional, new credit, you can ask the bank to remove you from her loan.  Typically, it's a good idea around the 3rd year to make this request.

Your site is a rip off....I gave my social security number!!!! You are a scammer!

Mar 10, 2014
Helpful to 14 out of 14 people

tbdc's response was spot on.  It's not hard for a thief to obtain your Social Security number.  It is more difficult for them to go through the continuing  identifactation process trying to answer questions you only know the answers to.

If CreditKarma is looking for more information, then it's for your own protection.

Drop in score, nothing negative

Mar 16, 2014
Only in America
Helpful to 7 out of 7 people

There are no "Bonus Points" awarded to your credit score for paying off a loan.  The status on a paid loan is changed to "Closed" and can actually have a negative impact on your credit score.

45 points seems to be really excessive, but it's probably only temporary.  Hopefully you'll start to realize a slow, steady climb and get most of that back this year.

my credit score is 670-690 will i have a problem leaseing a 2014 honda? value $40,000.00

Mar 13, 2014
Helpful to 5 out of 5 people

The above response is personal opinion.  He wasn't asking what you would do.  There are many reasons people lease brand new cars and not want to drive around in $5000 junkers.  I, for one, lease.

To answer your question "will i have a problem leaseing a 2014 honda? value $40,000.00"

You might.  Generally, leasing requires a 700 score or better.  However, many institutions have a "Tier" grading meaning, that 750 guy is a tier 1 and able to get that really sweet rate and payment you see advertised on TV and the internet.  You might fall into a tier 3 or tier 4 resulting in a higher payment due to the credit risk.

It's all going to come down to cash, cash, and cash.  The more cash you have, the better your odds.  Reason being, on a lease, your not financing the full $40,000 but rather paying on the part of the car your using.  On a Honda, that might mean a number closer to $18K or $19K depending on the car and your lease term. 

If you think your lease options are limited, consult with the dealer first.  A reputable dealer can give you a quick credit review.  They can tell you what your chances will be and how much money you'll need to make it work.  They might be able to suggest other options.

Good Luck.

I want to trade in and refinance my car is that possible? How would it work?

Mar 10, 2014
How would it work?
Helpful to 9 out of 10 people

Be very careful here.  It depends on how long you financed your current car, and how old that particular loan is.

Most people finance cars for 72-months.  If you're current loan is less than 5-years old, you might have a small problem.  If your current loan is less than 3 years old, then you're going to have a bigger problem.  This is a very dangerous trap (financially) to fall into.

Everybody knows that a car depreciates the moment you drive it off the lot.  Unfortunately, it depreciates faster than you can pay it down.  A lot of this is attributed to the fact you're paying interest on that loan, and interest does not add to the value of your car.  Therefore, odds are you're going to owe more on your car than what is is worth.

This is called being "Flipped" or "Upside Down".  Here is an example.  Let's assume you're payoff is $10,000, but your car appraises for $6000.  The difference between the two ($4000) is the amount you are "Upside Down".  That $4,000 gets rolled into you new loan.  So, in addition to paying for the new car, you'll also still be making payments on your old car, even though you don't own it anymore!  That $4,000 would represent about $80 per month of whatever your new payment is.

Formulate a plan before visiting your dealer.  Call your bank and get an exact 15 or 20 day payoff before going car shopping.  Compare this amount to Kelly Blue Book trade-in values at WWW.KBB.com   Know exactly where you stand.

Visit http://themoparman.com/Car_Buying_Mistakes_.php to learn more mistakes people make when buying a car.

Looking to buy a new car, is a score of 670 sufficient?

Mar 10, 2014
Helpful to 10 out of 12 people

I agree more with daddy2twins.  Depending on what credit model the dealer is using, you should have no problems.  Right now, banks are buying deep.  This means they are approving people with scores much lower than yours at competitive rates.  With the money you have down, any dealer with any type of merit should have you driving in a couple of hours.

can one get an auto loan and not actually use it for the same but for other purposes?

Mar 13, 2014
Helpful to 3 out of 3 people

It depends.

If the loan is secured (as most auto loans are), the answer is "no."  Reason being, the title of the car is encumbered and sent to the bank who is financing your loan.  They keep it as collateral in the event you fail to pay your loan  Proceeds for the car (or bank check) is usually made out to whomever is selling the car and not to you.  You receive a clear title back once you pay the loan off.

If the loan is unsecured, then the answer is "yes".  Unsecured means there is no collateral.  You get the money free and clear to do what you want with.  If you use it to purchase a car, then the title is signed right over to you.  It does not go to the bank.  

Typically, unsecured loans are harder to get as you need to have great credit.  Interest rates on unsecured loans are usually higher too in order to offset the higher risk of defaults.

Standard car loans are much easier to get, even if you have credit problems.  Since they are secured, the interest rates are much lower. 

Credit card utilization and your credit score

Nov 01, 2016
Helpful to 2 out of 2 people

You get very little credit for what you did yesterday., but it does add up over time  Credit scores are based on what you have going on today and how that will affect your ability to pay tomorrow.  Carrying a $0 credit card balances will typically drop your credit score.  Sometimes carrying a small balance on 1 or 2 cards for a few months shows that you can make on-time monthly payments and will increase your score, but it will never acheive an 850.

Credit scores aren't based strictly on credit cards.  Carrying major loans like a car loan or mortgage are an important factor.  If you have open loans such as these, then carrying a $0 credit card balance won't make such an impact as much of your score will be determined by how you pay the big stuff. 

Scores over 800 usually come with much time.  People who have them are usually older with several car loans to their names over the course of years.  The same with mortgages.  Most older people have generally bought and sold more than 1 home in their lifetime.  All of this successful credit over a period of 20 or more years will generally make them a very good credit risk.  Yet, an 850 score is still very rare.

How to build your credit from scratch

Sep 26, 2016
Helpful to 2 out of 2 people

Tough situation!  If you cannot afford to come up with the required deposit, then that's a good indication that you wouldn't be able to afford the credit card even if approved.  It's too easy to fall back on a credit card as a crutch when you can't make ends meet on a month-to-month basis.  Before you know it, you're over your head, and now you have late payments negatively affecting your credit score.  In your case, having no credit maybe be better than having bad credit!

You need to be able to save a little at a time until you have enough to open a secured account.  Being disciplined enough to do this month-to-month is a good indication that you would be confident enough to make payments on a credit card.  If you cannot do this, you're probably better off where you are.

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