Mr.Handy67

I'm in the market for a 3G MDX CPO and yesterday I applied for Acura Financing through their website but I was surprisingly denied. I put myself down (credit score ~760, income 34k) and my wife as the joint (credit ~755, income 56k) and as we are living with her mother, we put "living with parents'". We were denied 10 min later. The only thing that we have is my wife's student loan which is about 14k but we pay it regularly as well. We also have less than 1k in credit card bills which we pay in full monthly. Should I give them a call? Any reason we would be denied?

justnspace

iTrader: (1)

always always get pre-approved at your local bank or credit union...THIS way, you have info! you'll be armed with credit score, interest rate, AND the amount banks are willing to loan you.

by going in blind into a dealership, they can and will take FULL advantage of you...like how you're being denied....if you went to a credit union,they can tell you WHY you're being denied...(most likely it's debt to income ratio)

and of course! if you arent getting the info you need from a dealership website...CALL or inquire.

mrgold35

Most likely the "living with parents" part didn't help along with debt to ratio % (DTI). Long term payment histories like previous car payments, mortgage/rent, or good unsecured credit card(s) payment history go into pre-approval. Credit is a lot tougher to get today compared to before the crash of 2007/2008. I would divide my avg monthly bills by my monthly gross income (before taxes and deductions) to figure out my debt to income ratio ($3000 gross divided by $1000 bills = 33% debt to income ratio). Pretty much anything that keeps you in the mid- 30% or below should be A-OK. I would do the same thing; but, add in the MDX payments. If adding the carpayment put you above 40% DTI, that could be another reason for getting kicked out. Another way to increase your credit score is getting an increase on your unsecured credit card limits. Having more available credit can up your score from 5-40 points and that might also make you look better if you had an even higher credit score. I would not recommend this unless your are very responsible and discipline with credit (I wasn't fresh out of college starting a family).

Assuming your DTI is A-OK, I've always get pre-approved from your bank/credit union before stepping into a dealership. Financing is another revenue stream with dealerships along with accessories, warranties, trade-ins, service/parts dept, maintenance contracts, ADM (Additional Dealer Mark-ups), etc... If the dealership doesn't get you on the price, they will try to get you on the other revenue streams. Getting pre-approved for a car loan is like when you were denied an unsecured credit card for a long time and once you get one credit card the flood gates open and you get 2-3 offers in the mail every week. Getting pre-approved from a bank can sometimes get you a cheaper interest rate at the dealership because making a little money is better than making no money for Honda Financing corps.

justnspace

iTrader: (1)

like MrGold advised; you can pit the banks offer against the dealers offer to get the best offer!

mrgold35

I think I would also think about what life changes you are going to have over the 3-6 year car loan:
- still living with parents
- starting a family
- moving to your own place
- promotions/pay raises
- changing jobs
- going back to school

I don't know how Honda financing does it approval process and if paying no rent in a "living with parents" situation counts against you as a red flag. Renting/purchasing a place the next 3-6 years down the road for at an avg of $1000-$2500 (depending on which part of the USA) could put you way over debt to income ratio with the MDX payment. You might be unknowingly keeping yourself stuck at your parent house until you make more money or pay off the MDX.

I would do the same exercise of calculating my DTI and factor in the avg rent/mortgage in your area to see if my % is still mid 30s or below with MDX+rent/mortgage. A lot of folks can tell you purchasing a car can hurt your chance for a house later because of DTI; but, house first/car second is much easier to get approval for down the road.

Mr.Handy67

Thanks guys. I did the pre-approval through the Acura website, not any particular dealership. My wife and me both have credit in the mid 700s but since we really only have her school loan and neither of us has ever had any other kind of loan before, maybe we don't have a long enough history? We have a couple of credit cards all joint with our overall limit in the upper 20k's. We don't have much debt and after our monthly spending we have around 2, 800 left over. I will go to my Credit Union and see what happens.

Mr.Handy67

Yes we factored these things in. My mother in law is actually going to be paying of the monthly payments with us and since she is only in the house 1 day/wk we pretty much live here rent free and utility free by ourselves. We do plan on living here for the next few years while my wife finishes up school and both of our salaries will continue to increase. And as far as changing jobs, we are both city employees (her being a teacher) so that is pretty stable. And we already have the family started which is why we are looking at the MDX Having a mortgage where we live is pretty much impossible with or without the MDX as most houses are in the upper 600k range.

justnspace

iTrader: (1)

ah! get more serious by getting pre-approved. this will get the ball rolling on which items you're required to have as far as loans go

thoiboi

Wow so affordable




Way to brag

NBP04TL4ME

If you truly have $2800 left over at months end, you may want to consider putting more $$ down and looking for a smaller payment / loan. As you mention, you may not have a long enough or large enough credit history and going big on one of your loans may not be possible from the lender's side. You mention having a couple of credit cards - do you use them? Do you pay them off every month? Lots of variables..........

mrgold35

I would put on your application your rent instead of "living with parents". You still contribute to the up-keep of the home in-lieu of cash payments and I would put that amount as your monthly rent payment. They might have changed the car loan application form; but, I don't remember ever showing proof of a rental agreement or a signed lease for a car application form (only for a home loan or enrolling a kid in public school).

I would also think about different vehicles new or used. I didn't purchase my first CUV until 2010 +20 years after I graduated from college (Acura RDX). It was just mostly Honda 2/4 door Accord coupes/sedans before then. By 2010, my daughter was 24 years old and my son was 12 (huge gap between kids). We still did everything we needed to do and had the option to rent an SUV if we needed more room. The Honda CR-V is pretty close in interior space as the MDX and can have more tech in some trim levels (Apple carplay).

Mr.Handy67

Brag? I said it was impossible... I live in NYC. That's the average price for a non fixer-upper... Nothing to brag about... Other areas nearby easily cost double that. We live in a 2 bedroom apartment with incredible deal on rent.(Plus parking!) My wife has lived here for nearly 12 years. I pretty much just moved in lol.

[QUOTE=NBP04TL4ME;16049334]If you truly have $2800 left over at months end, you may want to consider putting more $$ down and looking for a smaller payment / loan. As you mention, you may not have a long enough or large enough credit history and going big on one of your loans may not be possible from the lender's side. You mention having a couple of credit cards - do you use them? Do you pay them off every month? Lots of variables..........[/QUOTE

Sorry I didn't make it clear. We use our cards exclusively, never pay with cash or debit and we pay them off in full. We use it for all our weekly/monthly spending: Gas, food, etc. However, we each have been at our current jobs for less than 3 years so our credit is relatively new. Putting a bigger down payment is certainly an option but not one I was hoping for. We initially wanted to do 3 down with around $5-525 in monthly payments mostly for fear of being out the cash if anything were to happen. But im open to suggestions.


Pilot was our back up plan. We frequently need the cargo room and the ability to have a 3rd row for kids and those who fit. (My wife fits comfortably lol) as I am the chauffer for many people especially when we all go out (which is often)

thoiboi

Jokes bro... Im in southern California

mrgold35

I'm spending the 4th of July week in NYC with the wife and youngest kid to do the tourist thing and watch the fireworks on the 4th. We are doing Air BnB in Hell's Kitchen area. From what I gathered from other, any type of awd CUV/SUV would be helpful with the sometimes rough conditions of the NYC streets and the snowy/icy winters.

NBP04TL4ME

^^^ Definitely beneficial to have something with suspension travel to soften up the ride.

jzhu625

iTrader: (2)

if you're serious, go to a dealer, they can help you better with a loan.

justnspace

iTrader: (1)

yeah, if you want to get taken advantage of.


"we got you! monthly payments are ONLY $200.....for the next 10 years.."

Mr.Handy67

​​​​​​It is true however snow is removed quickly but at my job I have to be there at 5 am whenever there is a snow storm!

NVAKeith

20 years ago when I got my first auto loan I was living rent free with my parents. The bank told me that if I put $0 in the rent box they will assume a certain local market amount for that category so they suggested I put in something....

McRCN

I always get a preapproved credit union loan before going to any dealership. Years ago I had one dealer try to add on a $700 life insurance policy for a $10,000 loan. Every time the dealer can sell you something it gives them another opportunity to make money extra on you.

joeaverage-AZ

Mr. Money Moustache... Worth a read.