Any one who works with new car loans please, a little advice?
Answer:
You probably can't get off the loan as a co-signer with only 8 months history. He might be able to finance elsewhere, but there would be an early payment penalty. Current status on paying off the collection will help, and the longer you have kept those payments current will help more. It may help to cancel the credit cards, at least some of them, since lenders perceive that as a potential competitor for their payments. But since most people need credit cards, you can have your credit line reduced to console the car lender that they aren't too exposed to future debts.
Shop around at a number of banks to get the best possible rate. If you belong to a credit union, they usually provide the best rates. As a former car salesman, I strongly advise against financing in the dealership. Not only do they have higher rates, they can raise the rate for additional markup. The Finance office is the most profitable part of any car dealership.
If you put down $5000 that will help a lot, but if you refer to 5%, that isn't a lot of downpayment. $5K downpayment helps a LOT.
Shop around banks, and you should do okay.
Good luck, and get your credit line in order with the bank, and shop around for the best possible deal on the car you want.
See if you can't refinance the 19% loan.
If you still qualify for a less than 10% interest 100% loan and use the 5k to pay down the 19% loan instead.
Your situation is complicated by bf. Why not use his car (which technically should be half yours if you cosigned the loan) and find him a temporary less expensive solution?
Your credit score is only part of the battle that you're probably going to face when trying to buy an additional car under your name.
1st - The loan you co-signed with your boy-friend is fairly new. (Meaning there is not a long history established)
2nd - You said you have had collection issue in the past; how long in the past? Even though it's paid, if it was a recent pay, lenders will look at that and also look at how long was it in collections before you paid (they can tell this by the payment status, i.e. 30 day late, 60, 90, 120, etc)
3rd - What is your current debt to income ratio. Even if you get pass the credit issues that you've had, can your income substain a new vehicle loan PLUS is your boy-friend defaults on his? A lender is definitely going to look at that. They take into consideration cost of living and your current dependent status (meaning if you have kids) also. This is probably going to be the hardest part to overcome.
From your post you said your boy-friend (as well as you because you co-signed) have a loan for 26K @ 19% x 72mo = 607/month car payment. Just guess that you'll probably get the same interest rate that you just got in April, then you wanting to finance 22K @ 19% (just guessing) x 72mo (which is definitely what your going to have to go with if ANY bank even considers you for a loan) = 514/mo payment.
So you looking at well over 1K/month for payments and insurance. Unless you have a heck of a income and long gevity with your employer, then you're probably going to get either denied completely or have to take a car of an extremely lesser value with shorter terms and still pay a higher interest.
The only bank that I know that will possible even consider such a situation is Credit Acceptance Corp, they'll pretty much finance anyone with an EXTREMELY high interest rate.well exceeding the 19% you and your boy-friend are currently paying.
I know this probably isn't what you wanted to hear, but it is what is it.the truth.
Good luck to you.
Do what you can to get that loan off your name. To be blunt :IF HE LOVED YOU, HE WOULD CARE ABOUT HOW IT AFFECTS YOUR WELL BEING.
Yes a good down payment will help. I would, make him sell that car and use the down payment to pay any deficit (will be worth it in the end) . Then get yourself 100% financing (if need to) when your credit clears, at a lower rate. Remeber: ITS HIS PROBLEM, not yours. God Forbid you break up, if you do, you will be kicking yourself everyday.
being as how u are putting down 5gs , they are not going to turn u down but they may ask that u get a cosigner.. since ur credit is not a1..maybe u need to get a used car and one that is about 10 -12 thousand dollars. neons are great , dependable cars.. in the meantime make sure ur guy is making the payments ontime.. late payments are going to kill ur credit..try to get him to double up on payments to get the bill down long before the 72 months.. if a dealer sees that car being paid quickly, it makes it look better for u .good luck
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