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Loan lingo.....long..... Posted by Mike Lynch [Email]  (#81) [Profile/Gallery]
(more from Mike Lynch) on Wed, 31 Mar 2004 13:34:06
In Reply to: Financing question..., Clay McNeely  [Profile/Gallery]
, Wed, 31 Mar 2004 10:13:33
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One thing I would be worry about for you is that you say you have no credit, which leaves one of two possibilities. Either you truly don't have any credit, or the more likely scenario that there are negative things on your credit report unintentionally, but undiscovered until the need for real credit has come up.
You don't say how old you are, but a true credit "ghost" is uncomfortable for lenders, particularly at a mature age. And if there are any negatives, parking tickets, old roommates phone bills, subscription agreement collection accounts ("but I thought each additional album was only a penny?") it may reduce the ability of a co-signer to get you a lower rate.
Down payment will play a key role. You better have some serious, 30%ish, cash to put down. You're excluded from first time buyer programs because of being only 7 months stable, most require one year. Speaking of stability, have you been employed in the same field previously? This would add to your chances, it's hard to want to grant a 4-5 year loan based on 7 months of history.
A co-signer could go down a couple of ways. Loans are generally "rated" to the buyer or line 1 person. So if you insist in being on line 1 and the co-signer on line 2, then the loan rate will reflect the line 1 person, unqualified you, which means high. If you have a well qualified co-signer and they go on line 1 and you go on line 2, then the rate will reflect your co-buyer's good credit.
Used to be credit agencies didn't report credit for line 2 folks so it WAS essential to be on line 1 to establish credit, but nowadays line 2 folks receive the credit rating as if they were the spouse of line 1 folks, or joint credit. So if you are trying to establish credit as well as secure a loan, then line 2 works just as well as line 1. So go on line 2 and get the lower rate if you can talk your co-buyer into that. Whether line 1 or line 2, it's a shared obligation which may be required to be paid entirely by either of the parties.
An out of state co-signer, that's tricky, but do-able. A dealer with a national, factory backed lender (GMAC, Saab Financial, Ford Credit, Etc.) is far better equipped to deal with an out of state co-signer. A private party may indeed pull this off, but the dealer knows the ins and outs. For private purchase it will be necessary to get "pre approved". You may do this on line, or I might suggest a local credit union. Your bank, if it's a normal bank, probably isn't very competitive on car loans. Credit unions are the most competitive and the most human.
An approval will be based on an "advance" or "loan to value" ratio. That means if your approved for a 100% loan, the question is 100% of what? And does that 100% include tax and lic or not, likely not. Dunno' what value guide is used in your part of the world, here in Caleefornia it's Kelley Blue Book. Often marginal credit folks will only be approved for 80% of low book value. So if you pay wholesale for a car (not retail), you still need 20% down plus the tax and lic. The good news is lots of Saabs can be bought for the wholesale "book" value.
posted by 63.197.222...
, Wed, 31 Mar 2004 10:13:33, Thu, 1 Apr 2004 12:47:57, Thu, 1 Apr 2004 06:37:04
, Wed, 31 Mar 2004 14:44:37, Wed, 31 Mar 2004 14:55:46, Wed, 31 Mar 2004 14:15:27, Wed, 31 Mar 2004 18:24:05, Wed, 31 Mar 2004 14:19:39, Wed, 31 Mar 2004 13:34:06 <-- Viewing This Message, Wed, 31 Mar 2004 13:46:05, Wed, 31 Mar 2004 12:38:18, Wed, 31 Mar 2004 12:26:00, Wed, 31 Mar 2004 12:33:19
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