Didn't qualify for loan.

[1WickedCivic]

Debt to income? I'll bring that up to the finance manager Monday. See what he says. Although, I'm curious to know how they calculate these things as I don't have any outstanding debts or expenditures that would warrant a loan failure. I know I'm being screwed with the interest. I don't really know if that has anything to do with the dealership. Wouldn't it be the lenders making the profit on the interest? What does the dealership have to do with that profit? If they have a connection there's definitely something sketchy happening here. If I don't get anything below a 3% come Monday, I'm just showing up at the dealership cash in hand and paying upfront. I'm tired of having my credit record run up the wazoo for all to see just to get rejected.

Sounds to me that your dealership is jerking you around - not a good sign IMHO. Have you tried Alliant Credit Union? We were able to get financed below 3% & the FICO score used was 5 points lower than yours. PM me for details.

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[tacthecat]

I only look at the bottom line for the value of the car. I told the finance salesman not to talk to me in monthly payments. Talk to me for the total value of the car. I negotiated the price of a 2016 Civic EX (No Sensing or extra features) down to $20,000 clean. This includes taxes, fees, registration etc. I walked out of the dealership twice when they refused and they called me back with the price I wanted.

I was almost sure my credit was OK for a loan. I have a FICO score of 750 and never defaulted on payments, ever. All lenders they ran my loan request through, including a couple of federal credit unions, denied my loan. They financed me through some Honda-partnered crap at an 11.74% for 72 months interest rate that will add a total of $5,500 to the total price of the vehicle. I wanted to cry. The guy says he's going to try his hardest to get me a better rate, but I doubt he can. Wants me to come back Monday. He says that FICO scores don't matter. Just the fact that I never had a major loan before is reason enough to disqualify me. Essentially you are a nobody unless you've taken out a significant loan successfully, however you can't take out a loan if you've never had one to begin with. He says he's going to continue trying otherwise I'm going to have to stick to the rate for at least a year and try and refinance at a later time. No I will not! I refuse to pay a single extra dime. When I said $20K OTD, I meant $20K OTD. I'm not letting the loan sharks get any more of my money. It's going to hurt, but I'm going to have to end up paying it all on a lump sum. I wanna cry.

Run, don't walk, away. Suspect they're getting their price for the car and just reporting it as interest. Get in touch with your bank, better yet a credit union, directly and see what they can do. You might have to do 60 or 48 months but in the end you'd be better off to put your money into the car, not the dealer's pocket.

 

[bigjee]

Run, don't walk, away. Suspect they're getting their price for the car and just reporting it as interest. Get in touch with your bank, better yet a credit union, directly and see what they can do. You might have to do 60 or 48 months but in the end you'd be better off to put you money into the car, not the dealer's pocket.

+1. That 20,000 they offered you might be an illusion. Real cost maybe hidden in the high interest rate. 11% is outrageous. I would never sign that malarkey of a contract. Civic or maybach

 

[micha3lwin]

As a prior car salesman, I've only ever sold a car at 10+% interest rate once and that's because the poor kid really wanted to get the car (Lancer Evo X). He was 19 and he didn't care. I explained to him what the interest would be if he pulled the trigger and he still signed... He had no credit history at all but a fat down payment.

My advice to you is to get your credit report and make sure all of your accounts are in good standing. Lower your debt to income ratio. Then shop around for loans at credit unions. Honda salesmen get a bonus if they are able to get their customers to finance through Honda financial so they may be jerking you around.

 

[Boz]

A 750 credit score is good enough for any consumer financing.

What is your actual gross income? Is it straight salary or does it include commissions or a lot of overtime?

I know you said it was you net income, but even if $45,000 was your GROSS income, you should qualify for around $1,350/mo in TOTAL monthly payments.
--How much is your house payment / rent?
--How much are the payments on any other term debt, i.e. debt with regular fixed monthly payments that you have?
--How much are your credit card balances, credit limits, and current monthly payments?

It is in the best interest of the dealership to get you financed, so there has to be something else going on, especially considering that your own bank denied your direct loan request.

 

[GoPackGo]

There are several different FICO scores. FICO scores for credit cards, mortgages, retail cards, student loans, auto loans. And within each of those categories there is more than one. Experian for instance has a FICO 2, FICO 8 and FICO 9 for auto loans. Transunion has FICO 4, 8 and 9. Equifax has FICO 5, 8 and 9.

Each kind of FICO score uses the same basic criteria but weighted differently. On time payments, debt to income ratio, all that stuff.

By law each of the lenders who denied you has to send you the reason they denied you in writing. So you'll know exactly why they said no.

Worst case scenario you're stuck with the high interest loan (should you decide you really want the car) and then refinance it in a year or so.

 

[civicmanic]

These creditors are confusing sometimes. I have near perfect credit. I was denied for a $1000 credit limit Capital One credit card at one point. Within that same year, I was approved for a $400k mortgage, a $31k car and capital one also went on to approve me at a later date lol.

Just secure your own financing.

 

[CivicEX16]

Hey all! Thanks for your replies. I have yet to understand what in the heck happened. I will be receiving letters in the mail stating the reason for denial, but I wasn't going to get suckered into the interest rate so I decided to pay it all upfront. Although I preferred to finance the amount, I decided it was best to avoid the headache of a lender given the circumstances. Luckily, even if I planned to finance, I had the amount in cash so I ended up paying it all in full. My final price was $20K OTD as per the agreement.

 

[too]

First off, $20k for EX is an amazing deal, which is why it's too good to be true. When anyone finance you, the dealer gets a check a few days afterwards and that check will include your Present Value (finance term - in other words, what all your interest payments will be worth today). So the dealer's true price is $20k + $5.5k = $25.5k. That's what the dealer will get should you sign the paper work. Ask for cash buy price next time.

Second, Wall Street Journal's average auto loan rate is roughly 3% (http://markets.wsj.com/overview?mg=mdc-wsj#mod=mdc_topnav_2_3021 - scroll to "Consumer Money Rate"). So use that as a benchmark. That all depends on credit score how you vary up or down, but more than likely up. I got 2.5% pre-approval from Capital One up to $40k. You should be 3% or lower.

Third, credit score is mainly a function of cash flow - your income and expenses, and after that, credit utilization. Please note that there are certain things excluded from credit report - a major obvious one is investment accounts. You can have a million dollar 401K account, but if you have no job or income with 750 score, you can still be easily denied. Why? 401K is not very liquid (for those under qualifying age) and 401k withdrawal is generally considered "one shot" deal - you can't sustain living or payments by withdrawing.

Now, credit utilization. This is a percentage of your balance over available credit. If you have 750 score and your one and only credit card has a limit of $500 (because you never asked for credit line increase), this can hurt you. Why? If you have $450 balance, you have a whopping 90% credit utilization! That will get you some seriously high APR. Keep it below 20-25% before your major purchase. This is another serious metric they use beyond your income.

So if you have low limits on you cards, pay off the balances, wait 30+ days (for credit to update), then apply for loans - walk in with a few satisfactory rate pre-approvals....and I will bet you, that same car will cost more "out the door".

If you can't be patient and fix these things, then you will pay the premium.

 

[Boz]

First off, $20k for EX is an amazing deal, which is why it's too good to be true. When anyone finance you, the dealer gets a check a few days afterwards and that check will include your Present Value (finance term - in other words, what all your interest payments will be worth today). So the dealer's true price is $20k + $5.5k = $25.5k. That's what the dealer will get should you sign the paper work. Ask for cash buy price next time.

I'm 99.99% sure this is wrong. There is no way a dealer will get a check for $25,500 from a bank, credit union, or finance company for a car purchased for $20,000.

I do agree that $20,000 out the door for an EX is an amazing deal!

 

[JYR]

Have you considered a lease and then buyout in the end?

 

[civicmanic]

First off, $20k for EX is an amazing deal, which is why it's too good to be true. When anyone finance you, the dealer gets a check a few days afterwards and that check will include your Present Value (finance term - in other words, what all your interest payments will be worth today). So the dealer's true price is $20k + $5.5k = $25.5k. That's what the dealer will get should you sign the paper work. Ask for cash buy price next time.

This is not true, at all!!

The dealer gets $20k and that's it. The lender pays the dealer their $20k. And the purchaser then pays back the lender on a monthly(or weekly/bi weekly/whatever the terms of the loan are) basis. And the purchaser could at any time pay off the lien in full, in which case he would not pay out the full amount of interest. That interest is only based on the full term off the loan, but should the loan be payed off early the total amount of interest paid would be lower.

 

[too]

I'm 99.99% sure this is wrong. There is no way a dealer will get a check for $25,500 from a bank, credit union, or finance company for a car purchased for $20,000.

I do agree that $20,000 out the door for an EX is an amazing deal!

While I agree that they won't get the whole check for $25,500 that I was wrong, but there's something else going on here. My gut feeling is that he got 3%, which the interest may account for maybe $500-700, the dealer still gets the $24,800 or so check and lied to him about 11% APR when in fact, it is 3%. Thus, the sale price (and amount that the dealer will get) is much more than $20,000.

 

[civicmanic]

My gut feeling is that he got 3%, which the interest may account for maybe $500-700, the dealer still gets the $24,800 or so check and lied to him about 11% APR when in fact, it is 3%. Thus, the sale price (and amount that the dealer will get) is much more than $20,000.

They can't lie in a legal contract. That's not worth the amount of crap they would get in for fraud. And it wouldn't only be the dealership in on it, they'd have to get the lender in on it as well. Not feasible at all. This is a new car Honda dealership, not some "Honest Bob's" shady curb sider dealer type.

If the dealer gets $24,800, then the contract would clearly state that. And if the interest is 3%(or whatever number) the contract would clearly state that as well. The business manager thoroughly goes through the papers with you when you sign..

 

[Jermany]

First off, $20k for EX is an amazing deal, which is why it's too good to be true. When anyone finance you, the dealer gets a check a few days afterwards and that check will include your Present Value (finance term - in other words, what all your interest payments will be worth today). So the dealer's true price is $20k + $5.5k = $25.5k. That's what the dealer will get should you sign the paper work. Ask for cash buy price next time.

Second, Wall Street Journal's average auto loan rate is roughly 3% (http://markets.wsj.com/overview?mg=mdc-wsj#mod=mdc_topnav_2_3021 - scroll to "Consumer Money Rate"). So use that as a benchmark. That all depends on credit score how you vary up or down, but more than likely up. I got 2.5% pre-approval from Capital One up to $40k. You should be 3% or lower.

Third, credit score is mainly a function of cash flow - your income and expenses, and after that, credit utilization. Please note that there are certain things excluded from credit report - a major obvious one is investment accounts. You can have a million dollar 401K account, but if you have no job or income with 750 score, you can still be easily denied. Why? 401K is not very liquid (for those under qualifying age) and 401k withdrawal is generally considered "one shot" deal - you can't sustain living or payments by withdrawing.

Now, credit utilization. This is a percentage of your balance over available credit. If you have 750 score and your one and only credit card has a limit of $500 (because you never asked for credit line increase), this can hurt you. Why? If you have $450 balance, you have a whopping 90% credit utilization! That will get you some seriously high APR. Keep it below 20-25% before your major purchase. This is another serious metric they use beyond your income.

So if you have low limits on you cards, pay off the balances, wait 30+ days (for credit to update), then apply for loans - walk in with a few satisfactory rate pre-approvals....and I will bet you, that same car will cost more "out the door".

If you can't be patient and fix these things, then you will pay the premium.

I paid $20,900 for my EX with sensing, so it's not necessarily too good to be true.

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