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Posted in Auto Loans
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Question By
Reazo

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What are my chances of getting an auto loan with the following information?
Hello, I'll try and keep this short but I just need some good advice from people that are more credit inclined than I am. I recently decided to upgrade my vehicle to better fit my needs. I am looking at a specific used vehicle and will need a loan for around $11,000-$12,000 (this fits in my monthly budget for a 60 month loan). I was going to try and get approved for an auto loan through my bank and have my dad cosign (he's willing) because he has excellent credit. After doing some hard thinking I decided that I don't want to rely on him to help me out and it's important to me to get an auto loan by myself.

I am 19, almost 20, and currently attending a university while living in an apartment (which my dad is a cosigner on), paying rent with my own money. I have 2 credit accounts open from school loans which I am not making payments on until I graduate (unless I have extra money to start paying them early). I also recently opened my first credit card which is a student card that I utilize 15% of the balance monthly. According to Credit Karma I have a credit score around 700, but I obviously don't have a very long credit history. I also have never missed a payment.

Now that I've got my background down, I'd like to get to the point lol. I don't think my chances of getting an auto loan right now on my own are very high since I currently am not working. However, I do have a job for this summer making around $1,800/month. So my plan is to wait until May (2 months from now) when I am considered employed to apply for an auto loan. By waiting two months to be considered employed, wouldn't my chances of getting an auto loan go up a lot since I'll have proof of income? Along with much better interest rates? I also will continue working part time when school starts again in August.

So my question is, is waiting two months to apply worth it or will it not be much different than applying now? I know this was lengthy and I appreciate anyone who is willing to share some advice. Thank you.

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Additional Information

I also forgot to mention that I have decent money in the bank from selling my car last week (currently driving an older car to get by) and have pretty much budgeted my whole year out, so I can afford a monthly payment for a loan up to $12,000. 

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Paying interest is wasted money. You should put down as much as possible to avoid the interest, preferably paying for a vehicle in full.  If you're determined to obtain a vehicle loan, then It might be advisable to wait until you can show proof of employment from your employer in May. I would also suggest making extra payments on the principal, so you're not paying as much interest. The majority of auto loans are simple interest loans, where you're charged interest on the outstanding balance. Make sure there is no pre-payment penalty. Also purchasing a pre-owned vehicle will generally save money because of the depreciation on a new vehicle. 

Reply by
Reazo

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Thank you for your reply. I'll be putting down around a $2,000 down payment and making as many payments as my budget will allow. Hopefully during the summer months when I can work full time I'll be able to make double payments.

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