Learn Me: Bank Loans

Currently, I have no credit. Not bad credit, just none, at all. I am curious at buying a car and would like to know what the tricks, in's and out's of getting a loan from the bank. The car in question is a private owner, under $25k. Being a young (in my opinion ) man with no credit, would they risk loaning me money? I am assuming not. But let me know what i need to do and don't do...

Do you have someone that would potentially cosign for you? From the sounds of things, no one is going to be enthusiastic about writing that paper, which means that, if you can get approved, you will not like the interest rate.

How long have you been at your job? Do you have a history of paying your bills on time? (I assume you've paid rent and utilities at some point)

Go buy a cheap new car and pay it off in a few years.

Been at the current job for a month now, but have previous employment for a lengthy period. Not planning on quitting anytime soon either (Brad is my boss, so no excuse to quit ). I have had bills in my name previously, all paid on time. The only tardy bill i have had was when i was 17, went and got a cell phone and had a sky high bill in one month. Took a while to pay off. No co-signer.

I am thinking without a co-signer and not being here at this job for that long, that I will get denied.

DukeOfUndersteer wrote: I am thinking without a co-signer and not being here at this job for that long, that I will get denied.

Almost certainly. Building credit isn't hard if you're responsible and can add and subtract though.

You'll likely be able to get a loan, just not with a good interest rate.

Hence my suggestion to go ahead and buy a new car, you'll get a better rate, and deal with it for a couple of years. Pay it off and you'll be on your way to good credit.

You've probably got a very good credit rating from having paid all of your bills on time.

Have your landlord write up a letter saying that you've lived here for xy months and have not been late on a rent payment. Have a few pay stubs available. Bring your resume.

More importantly - go to a bank with a real banker, not some drone sitting in front of a screen pulling up a FICO score and getting an automatically generated loan app by a formula. Go to your local small bank or to a credit union. They'll be interested in whether YOU'LL pay the loan back, not whether people with the same three-digit score that caused all the banks to crash pay their loans back.

chaparral wrote: You've probably got a very good credit rating from having paid all of your bills on time. Have your landlord write up a letter saying that you've lived here for xy months and have not been late on a rent payment. Have a few pay stubs available. Bring your resume. More importantly - go to a bank with a real banker, not some drone sitting in front of a screen pulling up a FICO score and getting an automatically generated loan app by a formula. Go to your local small bank or to a credit union. They'll be interested in whether YOU'LL pay the loan back, not whether people with the same three-digit score that caused all the banks to crash pay their loans back.

No matter how you look at it, he'll have very limited credit history and he's only been at his job for a month.

No one wants to write that paper - since no one wants to buy that paper. If they will, the interest rate will be horrible.

I also suggest joining a credit union. Later go back and ask for a credit card. Use it wisely to make small purchases and pay in full each month. You should already have some credit though based on paying your bills.

Yeah, you should probably start off with credit cards instead. Get one, use it for gas only, and pay it off every month. Utility bills usually only show up on your report if they've gone to collections...

spitfirebill wrote: I also suggest joining a credit union. Later go back and ask for a credit card. Use it wisely to make small purchases and pay in full each month. You should already have some credit though based on paying your bills.

This. I did this and a small loan to finish school that I am paying off.

Before you blow this all out of proportion try it. You may be surprised. If it doesn't work then go to plan B

Disregard loans, buy this for $1500.

The guy is asking $23k for this car. If i can get that amount, then talk the guy down maybe a grand, then take that grand to make my first payment back, this wont have any effect on the interest rate? Trying to pay it off as quickly as possible wont affect the interest rate at all?

No, won't affect interest rate.

If it's a used car through a private party you're probably looking at a 3 year loan. The payments will SUCK.

Damn, Im getting kinda scared now. Appreciate the input fellas.

rotard wrote: Yeah, you should probably start off with credit cards instead. Get one, use it for gas only, and pay it off every month. Utility bills usually only show up on your report if they've gone to collections...

This, with a credit union. You may even have to do a prepaid credit card. Most likely though you could get a $500 credit card and start buying gas with it like this guy said. Pay it off every month. DO NOT treat it as a party card though. That will get you in trouble. No bank is going to give you a $23K check to go buy a car with out any credit. Especially these days. If you want a newer car, you are going to have to go to a buy here/pay here lot and get raped for a 25ish% car loan. This is not going to be a quick process.

If you are curious about your credit report, go to www.annualcreditreport.com not this stupid site that is not free. You are allowed to pull your report 1 a year for free from each agency. Most places use equifax, atleast thats what we used when I sold new cars.

Credit union FTW. Specifically I like pentagon federal credit union - www.penfed.org Currently used car loans are 2.5% for up to 5 years. I have almost all my banking with them. Easy and good to deal with and easy to get a live American on the phone who will work hard to help you.

In reply to pigeon:

That is cheap money!

I still have no interest in having a car loan.

Don't do it. A 23k car is not a credit building exercise. If you are young with no debt stay that way! Sure that car is sweet but it will be sweeter if you save for a few years and pay cash for it..

In reply to 92CelicaHalfTrac:

Um, hello... Details? Location??? :D

petegossett wrote: In reply to 92CelicaHalfTrac: Um, hello... Details? Location??? :D

Motor recently swapped in, motor has ~80k miles, located in Louisville, might need a wheel bearing, seller says it's all good otherwise, drives well.

Looks pretty decent as far as i'm concerned, and that's about the cleanest engine bay i've ever seen on one.

I don't know if it's on craigslist, saw it on one of the local forums.

Talk to a couple different banks and credit unions. Can hurt to ask right?

Before you spend 25K on a car that will only lose value, are you sure? What other bills do you have? House? Student loan / tuition? Child support to 5 baby mommas?

No house yet, no student loans, no child support. I am in a relationship where we had a daughter, but SWMBO has a job and combined now make a pretty decent amount of money a year.

This is what I am considering:

How old is the car in question?
A bank will typically want the car to be less than 10 yrs and less than 100k miles at the time you purchase it.
They use a sliding scale like this (not exact) :
1-2 yrs old car: 5 yr loan at 3%
2-4 yrs old car: 5 yr loan at 4.5%
5-7 yrs old car: 3 yr loan at 7%
7- 10 yrs old car: 2 yr loan at 10%