Disclaimer up front, my credit is not impressive at all (590) and this would be a second car.
Now, I can already hear you saying, work on the credit thing first, and I’m right there with you, every few months it’s going up, but I’ve put this off for a very long time, and the amount I’m looking for monthly is very low compared to my income (income is more than 20 times the payment I’m looking for, this payment won’t hurt my ability to meet other obligations, I promise those of you who are looking at me like I have two heads for wanting to do something like this with bad credit).
I’m thinking of buying a 135i, but it’s the kind of car that needs a warranty, and by the time you factor in a warranty (PenFed offers one of the only non-scams there), the interest rates someone like me gets (PenFed gave me 7.9% for 17k over 60 months) and the fact I probably won’t love those last 2 years without a warranty, a lease starts to look very attractive.
I’m aiming for 1500$ down. Are there any convertible leases that look good for that range?
In all honesty, I think odds are you won’t be approved for a lease with a 590 credit score. Your best shot would likely be with GM, but even then, I think it’s unlikely unless your derogatory marks on your credit are 100% not auto loan related.
No derogatory marks, just high credit balances from a long time ago that are getting paid off. I was hoping the high income to payment ratio would help, but I guess it doesn’t matter much if the score is that low…
My credit score is going up pretty predicatably as cards are paid off, I’d estimate if I put off the purchase for a few months I’ll be at 620, would something like that be more workable?
I think you need to be 650 or above, realistically.
You can certainly try now, but I almost wouldn’t waste the credit inquiry unless some of our more learned members can tell you whether you have a shot.
I’m going to agree with above and strongly urge you to wait until you’re at least at 650. Sign up for credit karma so you can keep tabs on your credit. Also take advantage of your free FICOs through Discover, Citi, etc.
As a seasoned credit card churner, I’d suggest working on lowering your utilization as much as possible and keep your debt to income ratio low. You really can turn your credit score around in a matter of months if you have sufficient income and aren’t carrying balances - especially since you don’t have any derogatory marks on your credit. If you’re savvy and on the ball, you can also transfer balances by taking advantage of various promotional offers with 0% interest for x amount of time.
But like @28firefighter said above, until you get that credit score to a more acceptable level, it won’t be worth taking the hard pull because you most certainly won’t get approved, unfortunately.
Hopefully this is helpful. Though I imagine you may know all of this already since you’re actively working on improving your current credit situation.
Buy a used convertible. Got my mother a second hand 02’ SL500 Silver/Ash, Sport with 30,000mi about 5 years ago for $14K. She’s had a blast with it. Only driven it a couple thousand miles, but she enjoys the car immensely. We put tires and a battery in it. She’s been told to only do oil changes as this type of car can nickel and dime you to death at the dealer. Car is probably worth what she paid and always gets compliments when she takes it out.
I know everyone likes to assume everyone with a poor credit score who wants anything more than a base model Sentra is just bad with money, but sometimes it’s not the case
This is a relatively small purchase to enjoy. I get the mental picture everyone who reads this post will paint, but I’m paying off thousands a month, the extra month or two it’d take to get me to zero balance because of this car won’t outweigh the enjoyment it brings.
There is another thread I just saw where someone was asking about their FICO. It looks like GM Financial might approve you, but at very low tiers. I’d sooner suggest you wait and get your credit cleaned up relatively quickly and then try a lease. In the interim, @Mort’s suggestion is a good one.
In NY/CT you’re still a couple months away from good convertible weather, and a couple % points APR will save a ton of money over the course of a loan/lease.
A ‘Penfed’ warranty which is really Route 66 can be for 5 years from the date of purchase, if you get the best version. Not sure where you’d find yourself 2 years out of warranty…
The length depends on the car and the longer term warranty has a lower miles requirement. The car I was looking at technically qualifies for the 5 year plan, but it’d be at the 100k limit within 2-3 years (maybe even 1-2 if I drove it a fair bit). I’d rather take the 3 year plan and have an excessive amount of miles covered even though it has a few more exclusions (all the expensive issues are still covered)
A lot of good tips here. The only thing I would change is your income has nothing to do with your credit score. It will come into play once you try to get a loan, but not before.
Also, I don’t think he will be getting any 0% balance transfer offers with a score in the 500’s.
Hmmm if I implied anywhere that income changes your credit score, that was unintentional. Let me know where you saw that in my original post and I can edit it. Running on little sleep
Edit: I think I see where you saw it. What I meant was that if he has sufficient income to lower/pay off his balances, that would contribute to an improved credit score. Intuitive, of course.
Some banks, like Discover, have pretty low standards. I’ve never had a credit score as low as OP’s, but it doesn’t hurt to see what’s out there even if you’re at 590. I have to imagine lower scores and/or lower incomes are their bread and butter for balance transfers.
Excellent points here. If I may throw in my 2 cents…
Pay off your highest interest cards first, the more you can throw towards them, the less it’ll cost you. I.E. a hard with 9% interest and card with 24% interest, clear the 24% first.
Setup auto-pay on all cards, do the minimum due, then pay extra. A friend of mine works in the financial industry and deals with credit and said when companies see multiple payments, that’s favorable.
I would keep a hawk-like eye on your credit, you can run your credit reports once a year free (Equifax, Transunion and Experian), run that and see what shows, any error that you see, I would review and respond accordingly.
The max you want on any credit card is 30%, if you can do a balance transfer, I would do that, if not, try to get your credit utilization to 30%. From what I’ve heard, 25%-30% is the magic number.
Also, once you get a good handle on it, I would be steady and slow. IMHO, I wouldn’t add too much to it too quickly, it can have an adverse affect. Credit Companies want to see stability and responsible credit usage over a long period of time.
There’s a few issues I see here. First, if your score is really 590 then I’d bet you do actually have derogatory marks. Remember that these are things like late payments too. The reason I say this is because if you can pay off all of your cards, which you say are the majority of your debt utilization, and you’d only reach a 620 then there’s another issue at play. Brand new accounts with only $500 in available credit will still hit a mid 700 FICO score after a year or two.
Otherwise that means the credit cards aren’t the majority of your debt utilization, in which case you have an entirely different problem.
One thing I will suggest is seeking out a local/regional bank and seeing if they have credit builder loans. These are typically low dollar, but relatively high interest rate, loans whose sole purpose is to build credit. I’ve seen people who were low 600s jump nearly 50 points after a six-month credit builder loan.
P.S. I hope you mean your monthly income is 20 times higher than the monthly car payment because if you only make $6,000 a year you’re going to have a hard time getting a loan of any sort.
I can’t scale the current increase to 0 balance because I get something ridiculous like 800, but presumably it will be high. I have been focusing on smallest balances first and closing them, my score would go up faster if I had started with the largest ones but it got me in the habit.
Pretty sure “income is more than 20 times the payment” means Income > Payment * 20.
Right, if “income is more than 20 times the monthly payment” like you said, then Income = Monthly Payment x 20, or Income = 300 * 20, or $6,000. Obviously “more than” is ambiguous, but I expect when people use those kinds of words they mean “close to” not “way more than”. There’s a tremendous difference between $6,000 annual salary and $60,000 annual salary, both of which are more than twenty times the monthly payment.
I think there was just some confusion in what you’re saying. You say it’ll take you a few extra months to pay off all your cards and you also say that if you wait a few extra months your score will be 620. Obviously I don’t know your circumstances, I can only base it on what’s been said here and assume it’s all correct.
