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Posted in Auto Loans
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Question By
Authenticc

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First time Car Buyer...730 Credit score, 2 year credit history what can i get?
I am a 20 year old college student currently have a $1500 credit limit, no debt, no bills ...ive had my credit card for 2 years just now and make 30k a year ive worked at the same job as a insurance agent for 3 years...ive tried to apply for 2 car loans (15k) about a year ago through my bank and credit union which I was denied because of lack of credit history...no co signer...I am worried that if I attempt again I will get another inquiry thatll reflect on my credit for another 2 years. Suggestions?

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New or used?

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I can't even eimagine a car dealership turning you down, if you truly have a 730 score and proof of a steady job.  Those dealerships are trying to sell and they'll find you a loan.  Maybe not on the price level of vehicle you're looking at.  You may have to lower your taste a tad bit.

But finding a loan on a used car, through your bank is another matter.  They do care about your history and the risk is greater on a used car anyway because the resale value (if the bank has to re-possess) is less.  If you're serious about buying used...why don't you start at your bank and ask them "what limit will you approve?"  Then go find something in that price range and make sure the blue book value is in line with that loan or they'll deny it.

Reply by
Authenticc

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Thanks for the response man turns out your right i contacted carmax and turns out i was approved for the vehicle i wanted which was 22k financed at an 8% interest rate after my $2500 down payment... no proof needed paid the transfer fee and just a matter of waiting for the test drive to finalize things.

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The issue I see is you are looking for a loan of 15K while making 30K,   50% of your income.   I for one would not make a loan like that.

you need to look for a car that is more like 3-5k at most.   and really closer to 3k.   Best bet would to PAY Cash. and have no loan.

A car loan should not be more than 10% of your income.

Do you have a Savings?   Can you Pay Cash for a much Lower cost car?  if you can Do that.

Good Luck

Reply by
Authenticc

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Although what your saying makes sense and is the smartest financial decision for anyone...realistically a 3-5k car is a basic 2002 or older vehicle with mechanical issues and high mileage.. i could buy a car cash for that price range but then future wise i am still left with the no credit history issue. However luckily i was approved for a 22k car loan through car max. Thank you for your help.

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Reply by
icuhowie

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Think very hard before you pull the trigger on getting anything new.

Auto's will do nothing but lose value!   You should not look at an auto loan for any type of Credit history building.  

You can build Credit History other ways. and your have your WHOLE LIFE to get there.   The car loan would be all debt. 

What If.

* you lose your job next week,  How are you going to make your payments?

* What will the insurance be on that NEW Car,  LOTS more then what you would pay for a Paid off Car!

If you have the Cash for a 5K car then buy a 5k car.   Save the monies you would spend about 300 a month to the side and then in 10 months  sell the 5K car for about 5k or just under and upgrade to an 8k car,   Repeat the process for another 10 months and then you are at a 10-11k Car.  20 months time. and it's Paid off too.

Your Credit History Takes Time,  so does your Credit Score.

If you look at my profile you will see the timeline of how I built my Credit Score and History back in the past 4 years.

Good Luck

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