Is it possible to get an auto loan with not-so-good credit?

[Jilian]

We're looking to downsize our vehicle to get something more efficient with a lower payment. We currently have an '07 Odyssey with a $19,000 loan. We'd like to lower our loan to about $10,000. The problem is that our credit union will not give us a lower loan (even with trading in the Odyssey) because our credit has changed. We have had excellent credit until about 6 mos ago when we had to accept a deed in lieu of foreclosure. That is the only negative against us, but it is a big one. Any ideas on how we can get a loan? I don't want to go with a shady loan company. Any suggestions? It doesn't really make sense because we are looking to lower our payments, you'd think the credit union would want us to owe them less :

[Ellien C]

emminently possible. I'd go to a used car dealer or sniff around on the Internet. Do you owe less than the car is worth? You aren't upside down on your loan are you? Auto loans are secured and generally anyone with a job can get one, no deposit necessary.

[nolansmummy]

We don't have very good credit (like low 500's), but we still got a loan for 11,000. One plus, was that my husband was making about 600$+ a week, and i was making 700$ a month, plus we both had been at our jobs a long time. We went to a good dealership-nothing shady. We didn't get the best rate , i think 16% ( i know its bad), but we were able to refinance a year later after on time payments to a much, much better, way lower interest rate. Dealerships can often find a bank to loan when you can't on your own. Besides that, i've heard that credit unions often have stricter rules so it makes it harder to get a loan through them.

I don't know, some others might have better suggestions, but we just went and found a car in our price and then spent awhile with the finance guys... they did all the work. We ended up with a 2005 corolla. Love it.

[Sharlla]

The place that I went to didn't do a credit check. It was basically an additional $500 in interest and finance charges (I borrowed $1700) We are making double payments every payday to get it paid off faster and to save $ on interest. They aren't even making me carry full coverage insurance.

[Jilian]

Originally Posted by nolansmummy

I don't know, some others might have better suggestions, but we just went and found a car in our price and then spent awhile with the finance guys... they did all the work. We ended up with a 2005 corolla. Love it.

I am actually looking at an '04 corolla. I guess I should see what their financing department can do for us.

[Jilian]

One more question: would it be absolutely insane to buy a car on a credit card with 9% interest if the dealership cannot offer me a better rate?

To the person who asked: we'd make at least $1,000 on trading it in, hopefully more.

[sweetfeet]

Originally Posted by Jilian

One more question: would it be absolutely insane to buy a car on a credit card with 9% interest if the dealership cannot offer me a better rate?

To the person who asked: we'd make at least $1,000 on trading it in, hopefully more.

Most dealerships will only let you pay $1k-ish with a credit card. I guess you could always do a cash advance on a cc, but those usually have a lower limit than the actual credit limit and a higher interest rate.

[ollineeba]

We got a good interest rate through Capital One (we have good credit, but friends of ours also got a good deal through them and their credit isn't so hot). It's really fast through their website and then you have their blank check to take car shopping (which means you don't have to deal with shady finance people at the dealership! ).
It's worth a shot.

[MyTwoAs]

I had a friend buy a 12k car with a credit card at a dealership because he had a .9% car. When we bought our car two years ago we paid for the tax and down payment on a credit card which totalled over 6k (silly points card). So it looks like the dealership rules may vary.

What I would do in your situation is save up a few thousand and take the $1k profit that you might make if you sell the car to a private party and buy an inexpensive car for cash. Financing a car with iffy credit just eats you alive with interest. If you go down to a $10 k car but double the interest you may not save any money in the long run. Definitely crunch the numbers first.

[xmysticprincessx]

Originally Posted by MyTwoAs

Financing a car with iffy credit just eats you alive with interest. If you go down to a $10 k car but double the interest you may not save any money in the long run. Definitely crunch the numbers first.

Yes, its possible to get a car loan, but like this pp said, it might not be worth it.

I used to sell cars, and there can be some high interest rates for people with iffy credit. IME, interest rates are significantly lower on new cars than on used ones. The 1st customer I worked with actually had iffy credit. She had really liked a used car that was 2 years old. We "shopped the deal to the banks." The best rate we could get her on the used car was 18%. She could have gotten a 10% rate on a similar new car. (Special promotion through Chase, I think.) To put it in perspective, this is when interest rates for people with excellent credit was about 3%.

There are a lot of shady dealers out there. One friend went to a dealer that (in the car biz) is known to screw people over on the backend (ie, financing). The owner told him that the bank wanted to give him a 19% interest rate (on a new car) but that he really went to bat for our friend and got the bank to give him an 18% rate instead.

With a higher interest rate, you may not be any more ahead in the ballgame. And if you're looking at trading a 2007 for a 2004, do your homework. I'm sure that some dealer out there could lower your monthly payments, but you'd be taking the loan out for longer than I'd be comfortable with a car loan (especially on a 4 year old car, even if it is a Honda).

As for the credit card, the dealership might take one of those "convenience checks" to pay for the car. You'd have to ask first. (Normally, they want a cashier's check for that kind of money.) The credit card fees can be high, and they would eat up a chunk of the profit the dealer would make. (BTW, dealers make a TON more money on used cars than on new.)

PM me if you have any other questions.

[Jilian]

I'm hoping to be able to refinance within the next year for a better rate. I did the numbers and we'd still be saving a decent amount in the car payment plus there will be a savings with gas. We're looking at a 2004 Corolla with an asking price of $12,9 w/30,000 miles and an '05 Civic w/28,000 mi for $11,900. These are just asking prices so I'm figuring on being able to get at least $1,000-2000 off. I've already had my trade valued with a dealer and will make $2,000 on trade plus the tax credit from downgrading. So even at 20% interest I'd still be saving a substantial amount per month. We're looking to do a 5 yr loan and pay it off early. But we like the option of 5 yrs in case something happens - it gives us the option of the lower payment when a 3 or 4 year loan does not.