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Originally Posted by wouql
Hey NoSoup...this is a great thread you've got in here.
Here's my situation: I'm 21 years old and I'm going to graduate from college in May. I'll be starting a nice job when I graduate (~$60k), and I'm single, so I should have plenty. I've worked there since last summer and I'll stay on part-time until I graduate (in about 6 months) when I'll become salaried. My credit score is in the mid 700s, but everything on it is extremely new; a credit card that's been active for ~6months (always paid in full every month), and roughly $10k of deferred student loans.
What I'm wondering is: I've gone my entire life without a car, and frankly, I'm sick of it. The nanosecond I can afford it I'm buying a car. My question is: Is there any chance I'd be able to secure an auto loan now, instead of in 6 months? My salary until May is only about $900/month since I'm a student and working very few hours (this has also been my income for the last 6 months). Does an offer letter from a company make any difference when applying for a loan? (I'm sort of assuming it doesn't, since it could theoretically be withdrawn at any time.)
Do you have any advice for me? I'm desperate to find a way buy a car now, and not in 6 months. In addition, I don't really want to buy a used or ultra-cheap one, since I'd be able to afford a much nicer one when I graduate.
EDIT: Two things I forgot to ask..... do they count student loans/financial aid packages as income? I remember my landlord did just that when I got my apartment (I hadn't even known you could do that; seemed kind of strange to me) but maybe I can benefit from it again? It's all in one big lump sum though, so I don't know how you'd count it "per month."
Lastly, do you have any opinion on financing online vs. through an actual bank/credit union? I belong to Bank of America, but online seems a lot easier.
Thanks again.
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To be honest, I'm not sure if you'll qualify for financing or not. Typically, I would say you wouldn't, but you have very high credit scores. Depending on the lender, some lenders are willing to overlook your actual income and give you a loan based solely on the fact that you have such high scores, meaning the chance you'll default is very low. However, many of the lenders that do that are going to require additional credit history, though not all do.
One thing you may want to consider is obtaining a co-signer, even if it is only for the time being and you refinance the vehicle once you become a full time employee. Another option would be just to purchase a "beater" or a cheaper vehicle that you can sell six months down the road for around what you paid for it. The value of a 10 year old vehicle is going to fluxuate very little over the next six months...
Most lenders are not willing to consider financial aid as income, although some might. The same goes for your letter of intent with your employer. However, smaller, more creative financial institutions - such as a local credit union - will have a greater chance of being swayed by such things. Another option, although it isn't one I would recommend - is a high risk loan. You'll be paying an absolutely ridiculous interest rate, and may even be limited on the vehicles you can purchase, but they'll lend to almost anyone.
Although this may not be what you want to hear, If you must get a vehicle now, I would go with a cheap used vehicle, at least for now. Hopefully, nothing between now and the time you secure your position would happen, but if it does, you (and potentially your co-signer) may be put in a postion that will ruin your credit, or at least make life difficult trying to keep up with a high payment.
As far as actual banks versus online companies, the choice is mainly personal, providing the institution you secure your loan from online is a reputable one. If you were to finance through a local bank or credit union, you'll have a place to go in person with any questions or problems with your account. However, often times online lenders are able to offer lower interest rates because they don't typically have the expenses of a brick and mortar institution. In situations such as yours, though, I would imagine that a smaller local credit union or bank will be more flexible with their financing options than a national company - be it online or not.
Hopefully this helps, if you have any more questions, please let me know!