Frustrating car loan issues

[DirkaDirkaJack]

Hey guys, hoping for some insight on this one:

Background: About six months ago I graduated from college with no money, 20k in student loans and had never had a credit card. I then got a job (which I still have) that pays way more than a 24 year old slacker should be making. So I called up my Credit Union and asked for a car loan (my current ride is still titled in my parents name). They said they couldn't give me a loan at all, because I had zero credit history and a student loan doesn't count for credit history.

So now I have three credit cards which I have used and payed off (almost) during the last few months to get the credit history. Mind you, I still have and had a good credit score 720-something, just no history. So today I ask the CU for a 5k car loan....yeah not a huge loan, and they know how much I make, and my current debt ratio could easily handle this.

They say they can't approve me for a car loan at all because a car loan is "unsecured debt" and I don't have anything like a house, 401k, lots of savings or another car worth a lot of money, which they say they would need as some sort of collateral.

so my question:

since when do you need 5k worth of assets to back up a 5k loan? Like, if I had 5k in the first place, why the hell would I ask for a loan? And I am pretty sure everyone driving around financed cars don't all have the assets to completely back them up....so what gives? What am I missing here?

[P_McPoser]

I ran into the same exact issue 4 years ago. Although I did own a home right away also, so I could get loans..I just couldn't get an auto rate better than 12%. I just ended up piggybacking off my dad as he was willing to cosign. Maybe that's an option for you?

[gretch6364]

That is a little BS...the car you buy should cover part of the collateral until you become upside down in the loan.

[Anxious Mo-Fo]

I'm calling BS on the OP.

But if he's serious, I'll give him a hint: 777

[DirkaDirkaJack]

yeah, that wont give me a rate at 12%, they just wont give one at all. I asked about co-signing and they "don't do that". Instead. my mom (or whoever) would have to give them the 5k and they would put it in an IRA or something, as collateral, and then give it back with the interest it created once the car was paid off. Well, if could convince my mom to do that, I would just get her loan the 5k to me....

yeah....i thought the car was the collateral too...I can ask the bank for more specific details tomorrow, but you basically got what they told me.

[gretch6364]

Find a different credit union...if your mom has good credit, there is no reason they shouldn't give you a loan with her as a co-signor....after all, it is just like her taking out a loan...as far as liability and collectability.

[jSki]

You shouldn't have a problem getting a loan for 70% of the price, pay a few grand of your own money and get a loan for the rest.

I highly recommend not taking a loan for the car though, especially in these times. If you have a decent job you should be able to save a few grand for a Subie that runs fine in a few months. Then you don't have to pay comprehensive insurance, interest on the loan or be locked into a shitty job because you have a loan to pay off.

The last think you want to do right out of school is take on more debt. It can really lock you down and limit your risk/options for a while if you have lots of overhead debt, particularly on a liability such as a car.

[Whiteroom_Guardian]

I am in a fairly similar situation. Trying to get a 10k car loan from my credit union. My score is 759, but I still need a cosigner. Luckily my dad is cool and is going to co-sign for me.

If you parents have good credit why not see if they can cosign for you. Sounds like no issue paying it back on time, so it really a win-win for everyone involved.

[Obstruction]

Find a different credit union...if your mom has good credit, there is no reason they shouldn't give you a loan with her as a co-signor....after all, it is just like her taking out a loan...as far as liability and collectability.

+1 on find another CU. Chattel loan is by definition a secured loan. Co-signer also called a co-borrower is as liable for repayment as primary borrower so there is no reason for them not to make the loan if your mom has good credit. And like jski said go in with a good down payment and you shouldn't have much trouble (at least at most credit unions I'm familiar with.)

[powdork]

i hear they are no longer giving loans to people that don't follow current events.

[pointedem]

since when do you need 5k worth of assets to back up a 5k loan? What am I missing here?

Have you been following any sort of recent news regarding the state of lending in the US right now?

oh... and +1 credit union.

[Hugh Conway]

$5k used car loan = sub prime definition.

[neck beard]

Save the cash. They are doing you a favour.

Read the papers much?

[DirkaDirkaJack]

what is really comes down to, is yes, i could have the money to buy the car outright in about a month and a half, but the guy is selling it now, and someone else is going to buy it if I don't...

so all this weirdness about "have to have the loan amount backed up in cash" is weird, huh? and the fact they don't let my parents cosign? yeah i thought that was odd. I might as well try and stall the seller for a month instead of switch banks all for some dorky little loan. The irony of it all is i kind of wanted to do the loan to build more credit....ha....

i doubt current events really effect insignificant loans from a small CU chain....and I did have the same problem (just less credit history) a few months ago.

[fez]

used car loans are harder to get than new car loans
used car loans for a private party sale are damn hard to get
if you need a loan, buy from a dealership.
i went to my bank to get pre-approved for a car loan when my wife and i were looking to buy a new car. the guy at the bank told me he couldnt touch what the dealerships can do and esp if buying new to go to the dealership.

[DirkaDirkaJack]

used car loans for a private party sale are damn hard to get

i think that might be it....

[Chainsaw_Willie]

Dude... There are millions of cars on the road. So there's one for sale now that will sell soon. No biggie, there'll be another, and another, and a few hundred more after that when you have the cash to buy it outright. And, in the current economy, there are lots of good deals to be had. Unless the car you're trying to buy is something super rare and a total steal, then don't be in such a hurry.

Lots of advantages to buying it outright, especially on a cheap (we're talking $5K here, right?) car. First, you don't pay any interest so you don't lose from both interest payments AND depreciation of the vehicle. Second, no need to carry full coverage insurance, which you will be required to do if you finance the car. On a cheap car it's not worth it. Carry a hefty liability and uninsured motorist plan and forget the collision. If you run into someone they're covered and you're only out the damage to your vehicle, which even if it's totaled will be less than what you'd pay for collision and comprehensive insurance at your age over a few years. If you're a good driver and never run into anyone else you'll save thousands of dollars over the years. If someone runs into you you're covered either by their insurance or yours if they don't have any.

Finally, by buying it outright you're not saddled with a fixed payment every month. That way if you have to pay for a repair (very likely on an old car) you will have extra cash available. And, in months when you don't have to pay for repairs you've got a few hundred extra to invest or play with.

Don't finance a $5K car if you have a good job, it just doesn't make sense.

[DirkaDirkaJack]

well, it is a rare, hard to find car for a really good price. That is kind of how this whole thing started.

Yeah, i know i would have to get more insurance and pay interest and whatnot, but i would be able to pay off 5k in like two months, so the interest would be minimal. Basically I thought if i financed it, it would be a win win because i wouldn't obliterate my savings, and i would build this credit history which i can't seem to get. oh well, i talked to the owner tonight and it looks like i can stall him for a few weeks. My girlfriend offered to lend me some money too....i feel super lame borrowing money from her when i make x3 what she does an hour....but coke is an expensive habit i guess...

[H0G]

i doubt current events really effect insignificant loans from a small CU chain....

lmao - do yourself a favor, turn on any news channel and watch it for 5 mins, then delete this thread.

let me guess, you want to buy a SUV to don't you. a ford exploder perhaps or are you an H2 kinda guy

edit- just saw your last post. if you can pay it off it two months, then save the money and pay straight cash money.

[DirkaDirkaJack]

ford explorer - way less than 5k

H2 - way more than 5k

neither are hard to find or rare....keep guessing...

[sftc]

OOOOOO, tease us some more so someone can track down this rare $5K POS and buy it before you do! Did you ever think that no one wants to finance the deal because it's an old $5K junker that needs lots of work, costs at least $2K a year to keep running, is unsafe at highway speeds, and will probably kill your 24 year old ass before you have a chance to pay off the loan?

[timvwcom]

I'm NOT a car loan expert...

-But I'm quite certain car loan terms are, or at least were pre-credit crisis, based in the majority on the year of the vehicle. Once you get over a certain age, very difficult to get a loan... Don't recall if it is 6 years old or 8 years or so???

-Also, I think they expect a larger downpayment portion the older it is as well. What were you planning to put down as your portion?

-Don't think 6 months or less of credit history is going to help much during the period right before the Great Depression II, but again I don't know nothing much.

-Even if you CAN pay back the car loan in 2 months, you won't... no 24 year old slacker ever does. We all were 24 once, well... those now older than... pfff, you know.

-Don't take money from the GF, unless you want to end up trashing the relationship and wind up on Judge Judy.

-"Rare, hard to find car..." really means a pain in the ass to find parts, supplies and service for.

-"...for a really good price" really means something big is wrong and you don't have a f'n clue.

-A seller willing to "stall" for a few weeks means he has already found his sucker.

-I don't know shit... even if I did, who gives a rip what I think!

-Good luck!!!

[ass-to-mouth]

i have really shitty credit (395 fico) and just bought a brand new taco (4x4 xtracab TRD package w/ 7 inch liftkit & nice big mickey t mudders) 100% financing at 1% over 72 months with TFS.

you must really suck at life.

[Lone Star]

you're having trouble getting a loan in this economy? WTF

[Jim J]

What's so special about this $5k car? Don't leave us hanging.