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Discussion Starter #1
Hello all, first time posting here. I'm heavily deliberating getting into the Colorado game, but this is also going to be the first car I'm going to be buying with my own money. So I'm hoping some of you can help me out dispelling some of the things I'm trying to figure out with auto financing either via a dealer's financier or a credit union / bank.

I work under the amount of hours of what's considered "full time" in my state, but still a decent enough income to afford a typical car payment and all the bills to go along with it (I do a lot of freelancing work and bounce between jobs a lot due to my profession). I've already done one hard-inquiry on my credit via a bank that I want to avoid doing again until I am confident I can pull the trigger on a vehicle (either a screaming good deal on a ZR2 Colorado or a Z71 if I can't find something within my range), but I don't know if where I am the banks can confidently sign off on a loan with how my job stability is without the assistance of a co-signer on the loan. I've heard most places only need paystubs with information on what you've made and/or W-2 forms from previous jobs up until a certain point. Plus I know some dealers will still sign off on a loan, but will smack you with a higher rate (that I intend to refinance if I must) if they don't think you're qualified well for better rates.

Secondly, I presume loans only cover the sticker price of the vehicle and I'm responsible for the taxes, tag, and title at the time of signing off on the car? Nobody really has made that perfectly clear.
 

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1. Welcome to the forums!
2. Your questions might be better asked on sites like: creditboards.com
3. Your income is only part of the puzzle. Current credit score is also a big factor, along with Debt to Income Ratio.
4. Often you can get a "pre-approval" without a credit inquiry, if you know your credit score.
5. Your rate will depend on a lot of factors. There is promotional rates you may qualify for, better credit gets better rates, some lenders will give better rates if you are putting something down.
6. You can finance the whole thing with TT&L, although you really should consider a down payment. If you are unable to put a down payment are you really able to afford a note? Do you have a trade-in?

Good luck!
 

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It depends on what state you live in. here in Missouri you cannot roll sales tax in to the payment. That is paid when you get your tags for the vehicle, which is another fee after the fact. which may be a couple thousand dollars,

Most lending places (dealer/credit union/ bank) will require a percentage of a down payment, other wise the more you borrow on the principal the higher interest fee.

If you have a good history with a bank or credit union,check with them. You may need to take in last years tax returns.
 

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Discussion Starter #4 (Edited)
I'm only asking about financing without a down payment because I was looking at some insanely good prices on ZR2s recently that I was hoping to take advantage of, but that is likely a non-issue if I can sit down and negotiate with the dealer on sticker price. That was the other thing I was going to ask - How much can a dealer typically flex on a vehicle's price? Like, for example, if I see a truck for $29k, can I talk them down to $25k or is a jump like that too much to ask? I know what my credit score is and I don't have much debt in the big picture, I can likely pay it off in a few months. I'll ask about pre-approval on the loan as well.

I fully intend to do a down-payment of some kind plus a trade-in or I sell my current car on the private market and throw whatever I make from that into the car payment. I wanna shrink my monthly payment as much as possible so that way I'm not trimming too much fat from my budget or I'm not able to pay bills and do some savings at the same time.
 

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Hello all, first time posting here. I'm heavily deliberating getting into the Colorado game, but this is also going to be the first car I'm going to be buying with my own money. So I'm hoping some of you can help me out dispelling some of the things I'm trying to figure out with auto financing either via a dealer's financier or a credit union / bank.

I work under the amount of hours of what's considered "full time" in my state, but still a decent enough income to afford a typical car payment and all the bills to go along with it (I do a lot of freelancing work and bounce between jobs a lot due to my profession). I've already done one hard-inquiry on my credit via a bank that I want to avoid doing again until I am confident I can pull the trigger on a vehicle (either a screaming good deal on a ZR2 Colorado or a Z71 if I can't find something within my range), but I don't know if where I am the banks can confidently sign off on a loan with how my job stability is without the assistance of a co-signer on the loan. I've heard most places only need paystubs with information on what you've made and/or W-2 forms from previous jobs up until a certain point. Plus I know some dealers will still sign off on a loan, but will smack you with a higher rate (that I intend to refinance if I must) if they don't think you're qualified well for better rates.

Secondly, I presume loans only cover the sticker price of the vehicle and I'm responsible for the taxes, tag, and title at the time of signing off on the car? Nobody really has made that perfectly clear.
You are a 1099 employee? There are banks out there that will finance you, but generally their rates will be higher. It's not the dealership that's smacking you with the higher rate; it's the banks.

Worth noting, instead of trying to go with the dealership and refinancing, why not just get your approval with your local credit union/bank and then walk into the dealership with that? Tell them you're approved at whatever percent and the only way you'll go with their financing if they can beat it. There are also some lenders out there that won't require your income or employment if you're above a certain score and have sufficient thickness on your bureau. There really is a lot more than just a score that goes into it.
 

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Also, keep in mind that it's better to have multiple hard inquiries within the same 15- or 45-day period than one now and one a couple of months for now. The act of "rate shopping" is allowed which counts all hard inquiries within that period of time as a single inquiry whereas one now and one 2 months from now will count as 2 hits when it comes to your credit report and score. I believe most lenders should be using the new scoring formula, but if possible it would be good to get all your rate shopping done within a 2-week window.

What to know about rate shopping
Research has indicated that FICO Scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, FICO Scores ignore inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your scores while you're rate shopping.

In addition, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO Scores.
 

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As a 1099 employee, you may need to provide tax returns. I had that issue with a home loan a few years back, despite an 800+ credit score, bank turned me down on a home refinance because I had less than 2 years self-employment returns at the time.

If you think you can pay it off in a few months, then why not save another 3-4 months and pay cash?

If you put less than a certain amount down, you probably will end up also having to pay an insurance premium to cover any shortages, called GAP insurance in the automotive world. Called Private Mortgage Insurance of PMI in the world of home loans.
 

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As a 1099 employee, you may need to provide tax returns. I had that issue with a home loan a few years back, despite an 800+ credit score, bank turned me down on a home refinance because I had less than 2 years self-employment returns at the time.

If you think you can pay it off in a few months, then why not save another 3-4 months and pay cash?

If you put less than a certain amount down, you probably will end up also having to pay an insurance premium to cover any shortages, called GAP insurance in the automotive world. Called Private Mortgage Insurance of PMI in the world of home loans.
GAP insurance isn't mandatory ever. Mortgages and auto loans are quite different.
 

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GAP insurance isn't mandatory ever. Mortgages and auto loans are quite different.
I always put enough down, never an issue for me. Wasn't sure what the requirements were.
 

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Discussion Starter #10
As a 1099 employee, you may need to provide tax returns. I had that issue with a home loan a few years back, despite an 800+ credit score, bank turned me down on a home refinance because I had less than 2 years self-employment returns at the time.

If you think you can pay it off in a few months, then why not save another 3-4 months and pay cash?

If you put less than a certain amount down, you probably will end up also having to pay an insurance premium to cover any shortages, called GAP insurance in the automotive world. Called Private Mortgage Insurance of PMI in the world of home loans.

Oh, I can't do the whole car in a couple months. I meant I can clear the tiny bit of debt hanging over my head in a couple months. I had to make a couple very expensive purchases recently for some PC parts and a new cellphone and I'm almost done paying off financing on a drawing tablet (a Wacom Cintiq) I bought a couple months back.

Also, for those asking, I haven't been a 1099 employee for almost 2 years now because I learned from that mistake and forgetting to pay quarterly taxes on what I earned. So I'm usually getting work from temporary jobs that I've convinced to put me on W2 status for the job length, or I've gone through freelancer agencies that put me on their payroll as W2.
 

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I always put enough down, never an issue for me. Wasn't sure what the requirements were.
GAP is optional even if you are financing 40k on a 30k car. Sometimes it seems like it maybe should be mandatory in situations like that but it is an optional product. Anybody that says you need to buy certain products (like GAP or a VSC) in order to secure financing is committing a crime.

Oh, I can't do the whole car in a couple months. I meant I can clear the tiny bit of debt hanging over my head in a couple months. I had to make a couple very expensive purchases recently for some PC parts and a new cellphone and I'm almost done paying off financing on a drawing tablet (a Wacom Cintiq) I bought a couple months back.

Also, for those asking, I haven't been a 1099 employee for almost 2 years now because I learned from that mistake and forgetting to pay quarterly taxes on what I earned. So I'm usually getting work from temporary jobs that I've convinced to put me on W2 status for the job length, or I've gone through freelancer agencies that put me on their payroll as W2.
If you're W2 then it is way easier. Just bring all of your stubs and worst case, your last 2 years tax returns. Again, income might not even be necessary.
 

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I don't pay enough attention anymore, but typically I give my social security number to the loan officer, dealer or bank, and they poke their computer a couple of minutes and say here is our rate. At my bank, I just call and tell them I want a new car loan, and they give me a rate.

For me, the rate has always been better via the dealer than my bank, even though on my truck, the dealer financed it through, drum roll, please, my bank.
 

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I don't pay enough attention anymore, but typically I give my social security number to the loan officer, dealer or bank, and they poke their computer a couple of minutes and say here is our rate. At my bank, I just call and tell them I want a new car loan, and they give me a rate.

For me, the rate has always been better via the dealer than my bank, even though on my truck, the dealer financed it through, drum roll, please, my bank.
The problem is that some finance managers at dealers play games with the rates because they make money off the loan by upping the rate slightly from what the bank offers. This happened to us recently when my wife was trading in her previous vehicle. I knew what our credit scores were and what rates we could get from a local credit union, but as has been the case for me before, the dealers can often times beat those rates.

This time, though, the finance manager came back with a rate of like 6% for the used Jeep when we were expecting something in the low 3s. The dealer didn't work with that particular credit union so couldn't get us that rate. We started talking about extended warranties and he started talking about options from a crap 3rd party and how much they would cost, I said I'd only consider a Mopar/FCA extended warranty which he looked up and gave me a price comparable to the 3rd party plan. We were chatting about random things as he was looking things up, everyone was being nice and polite, and then he asked how we felt about Wells Fargo, to which I said they're crooks, we all laughed, and then he checked their rate since they don't normally use them and was able to get us a rate of 3.3% which was lower than the credit union rate for the same term.

I don't feel like he was hiding that and hoping we'd bite on the higher rate, but I think they have a select few default lenders they go to by default because, like the 3rd party warranties, they make them more money.

The moral of the story is that whether it's the vehicle price or the loan rate, do your research and have an idea of what you should be paying before you sign any paperwork. That way you'll know if you're getting screwed or not. The sale price of the Jeep was good, the trade in value for the old vehicle was fair, so we were happy with that but the shock came with the initial rate we were offered. Some people may not care about the rate and only care about the monthly payment or sale price but it's your job as a vehicle buyer to protect yourself from being taken from a ride by knowing what you should be paying vs what the dealer is trying to sell you.
 

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...

I don't feel like he was hiding that and hoping we'd bite on the higher rate, but I think they have a select few default lenders they go to by default because, like the 3rd party warranties, they make them more money.

The moral of the story is that whether it's the vehicle price or the loan rate, do your research and have an idea of what you should be paying before you sign any paperwork. That way you'll know if you're getting screwed or not. The sale price of the Jeep was good, the trade in value for the old vehicle was fair, so we were happy with that but the shock came with the initial rate we were offered. Some people may not care about the rate and only care about the monthly payment or sale price but it's your job as a vehicle buyer to protect yourself from being taken from a ride by knowing what you should be paying vs what the dealer is trying to sell you.
This is very true. I always make the call to my bank first, since I know that I can handle that over the phone without too much hassle. Pretty much every time the dealer has beaten that rate, by at least 1-3 percentage points. When your credit score is above 800, it is easy to get the best rates.

A 1% difference in loan rate on a $25K loan, can be the difference in $250 in the first year, or over $20 per month. Make that 2-3 percentage points, raise that loan to to $50k on one of these new FS loaded trucks, and you can buy a lot of gas to keep that guzzler on the road.
 

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Discussion Starter #15
The problem is that some finance managers at dealers play games with the rates because they make money off the loan by upping the rate slightly from what the bank offers. This happened to us recently when my wife was trading in her previous vehicle. I knew what our credit scores were and what rates we could get from a local credit union, but as has been the case for me before, the dealers can often times beat those rates.

This time, though, the finance manager came back with a rate of like 6% for the used Jeep when we were expecting something in the low 3s. The dealer didn't work with that particular credit union so couldn't get us that rate. We started talking about extended warranties and he started talking about options from a crap 3rd party and how much they would cost, I said I'd only consider a Mopar/FCA extended warranty which he looked up and gave me a price comparable to the 3rd party plan. We were chatting about random things as he was looking things up, everyone was being nice and polite, and then he asked how we felt about Wells Fargo, to which I said they're crooks, we all laughed, and then he checked their rate since they don't normally use them and was able to get us a rate of 3.3% which was lower than the credit union rate for the same term.

I don't feel like he was hiding that and hoping we'd bite on the higher rate, but I think they have a select few default lenders they go to by default because, like the 3rd party warranties, they make them more money.

The moral of the story is that whether it's the vehicle price or the loan rate, do your research and have an idea of what you should be paying before you sign any paperwork. That way you'll know if you're getting screwed or not. The sale price of the Jeep was good, the trade in value for the old vehicle was fair, so we were happy with that but the shock came with the initial rate we were offered. Some people may not care about the rate and only care about the monthly payment or sale price but it's your job as a vehicle buyer to protect yourself from being taken from a ride by knowing what you should be paying vs what the dealer is trying to sell you.
Good advice, and I already know I can arm myself with enough information to get into this game without getting ridden all the way to the bank. I've been already offered a pretty good rate, but the credit union I went to needed a co-signer on the loan (which I wasn't going to do because I wanted to do this loan independently).

Question is, if it's possible, can I use that information from the bank saying "Well, so-and-so has a rate of X%. Can you come close to this at all?" and still go for a loan that doesn't need a co-signer? I think the only reason why they're asking for that is because a lot of my jobs up until this point were short-lived or temporary.
 

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Good advice, and I already know I can arm myself with enough information to get into this game without getting ridden all the way to the bank. I've been already offered a pretty good rate, but the credit union I went to needed a co-signer on the loan (which I wasn't going to do because I wanted to do this loan independently).

Question is, if it's possible, can I use that information from the bank saying "Well, so-and-so has a rate of X%. Can you come close to this at all?" and still go for a loan that doesn't need a co-signer? I think the only reason why they're asking for that is because a lot of my jobs up until this point were short-lived or temporary.
Regarding "rate matching", you can try but unless you have a pre-approval letter from the lender showing the rate you've been pre-approved for you're unlikely to get anywhere. Since one place is requiring a co-signer it sounds like you've been given a conditional pre-approval. Whether or not you can get a pre-approval letter in writing or not I don't know, I don't think this is very common in the auto loan world.

If you want to go get the loan on your own you may have to take a higher initial rate and then once you've generated 6 months of positive payment history you can refinanced at a lower rate. There's nothing preventing you from refinancing whenever you want, but you will have a hard inquiry whenever you apply for it and without some positive payment history first there's no point in even trying to refinance. Job length history combined with little to no credit history takes time to overcome. You may be confident in your ability to repay on time, but lenders don't care. They have to go by risk assessment and on paper you're a high risk. Good credit is earned and sometimes that means taking your licks with higher rates for a while until you've established a good payment/credit history.
 

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Discussion Starter #17
Regarding "rate matching", you can try but unless you have a pre-approval letter from the lender showing the rate you've been pre-approved for you're unlikely to get anywhere. Since one place is requiring a co-signer it sounds like you've been given a conditional pre-approval. Whether or not you can get a pre-approval letter in writing or not I don't know, I don't think this is very common in the auto loan world.

If you want to go get the loan on your own you may have to take a higher initial rate and then once you've generated 6 months of positive payment history you can refinanced at a lower rate. There's nothing preventing you from refinancing whenever you want, but you will have a hard inquiry whenever you apply for it and without some positive payment history first there's no point in even trying to refinance. Job length history combined with little to no credit history takes time to overcome. You may be confident in your ability to repay on time, but lenders don't care. They have to go by risk assessment and on paper you're a high risk. Good credit is earned and sometimes that means taking your licks with higher rates for a while until you've established a good payment/credit history.

It may have just been the singular lender I went to to attempt a loan inquiry, but they had to do a hard-inquiry into my credit and that hit me with a ~10 point reduction on my TransUnion report just for pre-approval, and that was the one that I mentioned that wanted a co-signer. I'm hoping I can ask around for better rates without having to smack my credit rating around like a ragdoll. My only major goal is to keep it under 4.0% APR at the very least, but below 3.0% would be ideal.

Still, greatly appreciate the straightforward responses, all. I'll keep looking around and see what I can get information on.
 

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As a 1099 employee, you may need to provide tax returns. I had that issue with a home loan a few years back, despite an 800+ credit score, bank turned me down on a home refinance because I had less than 2 years self-employment returns at the time.

If you think you can pay it off in a few months, then why not save another 3-4 months and pay cash?

If you put less than a certain amount down, you probably will end up also having to pay an insurance premium to cover any shortages, called GAP insurance in the automotive world. Called Private Mortgage Insurance of PMI in the world of home loans.
The 2 year employment thing is for home loans. They like to see you in the same line of work for at least two years or more, not necessarily the same job.
Wait 3 or 4 months? WTF? Are you kidding? Everyone wants it now! ;)
 

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Good advice, and I already know I can arm myself with enough information to get into this game without getting ridden all the way to the bank. I've been already offered a pretty good rate, but the credit union I went to needed a co-signer on the loan (which I wasn't going to do because I wanted to do this loan independently).

Question is, if it's possible, can I use that information from the bank saying "Well, so-and-so has a rate of X%. Can you come close to this at all?" and still go for a loan that doesn't need a co-signer? I think the only reason why they're asking for that is because a lot of my jobs up until this point were short-lived or temporary.
Sounds like that rate was for your co-signer's credit score and ability to pay, not your's. You know?

You never said what your score is but you can't expect a good rate with no/bad credit from any bank/lender. If you don't want to use a co-signer then I'm thinking you need a big down payment to help get a better rate and offset that rate. I'm wondering if you can afford that truck anyway?? Just something to seriously consider.

A very wise woman one told me, if you can't afford a car on a 3 year loan you can't afford the car, period. That same wise woman also told me that banks will loan you a lot more money than you can afford to pay back.
 

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It may have just been the singular lender I went to to attempt a loan inquiry, but they had to do a hard-inquiry into my credit and that hit me with a ~10 point reduction on my TransUnion report just for pre-approval, and that was the one that I mentioned that wanted a co-signer. I'm hoping I can ask around for better rates without having to smack my credit rating around like a ragdoll. My only major goal is to keep it under 4.0% APR at the very least, but below 3.0% would be ideal.

Still, greatly appreciate the straightforward responses, all. I'll keep looking around and see what I can get information on.
As I mentioned above, multiple hard inquiries in a short period of time only count as one in terms of your credit score. You could go to 20 different lenders at once, each one doing a hard inquiry, and those 20 inquiries would only count as one. If you're going to do this then get it done ASAP, don't take your time and have random lenders pull your credit at random times as doing that with 2-3 lenders over a couple of months is worse for your credit score than having a ton of lenders pull it within a 1-2 day period.

You seem to have the misconception that it's the number of hard inquiries that hurt your credit regardless of when they were done. That's just not the case. If your credit was pulled within the past couple of weeks then stop messing about and get financing secured or move on from the idea, dragging it out is only going to hurt your credit more. If it was more than 2-4 weeks ago then you could be beyond the "counts as one inquiry" window anyway, so if you're still wanting to get a loan then go get it but hit multiple lenders at once so all their inquiries only count as a single one for your credit score.
 
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