Car Financing Propects Being a Pro? (X/P)

x2ski · #1 07-19-2005, 03:18 PM

Sorry to cross-post this, but I'm worried that my original post in News, Views, Gossip will not get many responses (I've never read that section anyway, and it seems kind of hit-n-miss over there).

Just finished a search and there was one semi-relevant topic that didn't get many reponses.

My wife and I are looking at buying a house next spring after I have my second year of poker-related income tax returns filed.

It is my understanding that a no-documentation mortgage can have very attractive interest rates (sometimes lower than a conventional loan) if your credit score (FICO) is pushing 800 (max 830). After doing some research, it seems as though we're going to want to have a zero balance on our credit cards (not a problem), get my wife's student loans down significantly (shouldn't be too difficult, but currently in the high $30Ks), and obviously have all other bills up-to-date (duh).

In addition, I read that it is good to have a "current" loan such as an automobile loan. My vehicles have always been purchased straight up, and my wife is leasing (I know... this was done before I married her ).

So, where do I turn? My truck is a '99 Tahoe LT that blue books at about $8,500 for a trade, and I would have between $5k-$10k to put down. If I'm looking for a car at around $30k, that means I would need a loan of about $11,500-$16,500.

Any advice is greatly appreciated, and if anyone thinks this should be posted elsewhere, let me know (since this is somewhat poker-related, OOT didn't seem appropriate).

Thanks kids!

ChewyMint · #2 07-19-2005, 03:30 PM

I worked as a finance manager for a dealership for about a year. In your case, you're only looking for at most 50% or so of the ACV (Actual Cash Value) of your new vehicle to be loaned. Generally speaking, with a FICO over 700 or so, you will have no problem at all with financing a new vehicle in a deal structured with those figures.

ChewyMint

x2ski · #3 07-19-2005, 03:39 PM

[ QUOTE ]
I worked as a finance manager for a dealership for about a year. In your case, you're only looking for at most 50% or so of the ACV (Actual Cash Value) of your new vehicle to be loaned. Generally speaking, with a FICO over 700 or so, you will have no problem at all with financing a new vehicle in a deal structured with those figures.

ChewyMint

[/ QUOTE ]

It wouldn't be a new vehicle though, does that make a difference? It seems so, as interest rates and terms (36mo, 48mo etc) seem to differ between new and used cars.

I'm looking at '03/'04 Expeditions, Discoverys or Escalades and wasn't planning on going through a dealer for financing, 'cause that seemed even more difficult to attain.

What about income verification? Is that an issue with auto-loans?

Thanks for your help.

x2ski · #4 07-19-2005, 03:41 PM

I don't remember, but if he sees this, did you buy that thing straight up?

I assume you have a real job, but maybe not.

EStreet20 · #5 07-19-2005, 03:57 PM

If you're looking for a low interest auto loan, head for a credit union. They're extremely liberal with giving loans and you'll get a great rate. I don't know if your wife has a "real job" and I'm not sure if the fact that you file as a professional gambler is going to be an issue but I bought my first car (used a 2002 Grand Prix GTP) and financed through a credit union and was given a 4.25% APR despite having no prior credit, other than student loans that I hadn't even begun paying yet and my shitty temporary job, so I'm sure if you can prove any kind of reasonable income you'll get a low interest car loan without a problem.

good luck,
Matt

x2ski · #6 07-19-2005, 04:17 PM

[ QUOTE ]
If you're looking for a low interest auto loan, head for a credit union. They're extremely liberal with giving loans and you'll get a great rate.

[/ QUOTE ]

True, but it seems as though you need to open a checking account (at least) with required minimum monthly activity. I'd rather not have to deal with that.

EStreet20 · #7 07-19-2005, 04:31 PM

Ahh I gotcha, at the CU I went through I only had to open a "share account" there with a min balance of 50 (ballpark figure) bucks. I bought this car a year ago and have yet to touch that account since I opened it with the initial deposit. I guess it varies from one institution to the next.

ChewyMint · #8 07-19-2005, 05:05 PM

A pre-owned vehicle shouldn't matter. In the words of every car business junkie, "Cash is King", meaning with the amount of money you plan to put down, and the FICO it seems you are touting, you should be all set. If you have last year's W-2, that will work, and if you go through a smaller bank, your deposit/withdrawal records for poker may work.

ChewyMint

x2ski · #9 07-19-2005, 05:13 PM

[ QUOTE ]
A pre-owned vehicle shouldn't matter. In the words of every car business junkie, "Cash is King", meaning with the amount of money you plan to put down, and the FICO it seems you are touting, you should be all set.

[/ QUOTE ]

Just checked... Equifax says 704 (ugh). The main issue apparently was having a 46% balance/max ratio on my credit cards. That will be down to 20% or less in about a month, which apparently will increase my score, but I don't know what 704 can get me now.

[ QUOTE ]
If you have last year's W-2, that will work, and if you go through a smaller bank, your deposit/withdrawal records for poker may work.

[/ QUOTE ]

W-2? Huh? What?

I have a 1099 from real estate, investment income, poker income and filed taxes, that's it.

Also, my "smaller bank" is E*Trade Financial. No car-loans there lol.

I want a car dammit! (I should probably run this by the wife, but she loves surprises)

Stacheman · #10 07-19-2005, 06:54 PM

I work in the credit reporting industry, so here are a couple of tips for you. First, the credit scores that you get directly from Experian, Equifax, and TransUnion are NOT the same credit scores that lenders use when making decisions. They give you the "consumer" version of the score not the "mortgage" version. There are different versions for many different industries (auto, insurance, mortgage, etc). The difference is in the mathematical models used to derive the scores. Bottom line, don't put too much faith in these "consumer" scores. I have seen the consumer scores be up to 100 points higher than a mortgage score.

Next, amount of credit card debt is very important, second only to payment history in my estimation. Balances on credit cards should be kept below 30% of the limits. The lower the better, but it sounds like you know this.

Last, opening new accounts tends to hurt credit rather than help, at least at first. Inquiries that potential lenders put on your credit are harmful, so is taking on new debt.

I have not seen many lenders require 800 FICO scores to get their best rates on low/no doc loans. There are hundreds of lenders and products though, so I'm sure there are some. An 800 score is very tough to achieve, and not all the factors are in your control (ie, length of credit history). I have looked at 1000s of credit reports in the past 3 years and the number of scores in the 800s I've seen is probably in the teens.

Good luck, and I would be happy to try and answer any specifics if desired.