My father cosigned on my car loan so I could get 0.9% financing. Its a great deal, I financed $25,006.61 over 48 months, and I'm going to pay $461.19 in finance charges over 48 months. I'm at month 35, and I've paid $420 in interest already, and I owe $6861.72 right now.
I'm thinking about refinancing.
Why? I apparently have no credit. I applied for a $5000 motorcycle loan a few months ago, and was rejected, even though I've no debt besides the car payment, I've held a credit card in my name since I was 18, and i make more than 10x the amount of the loan every year. Apparently co-signed loans don't count even though I paid every single payment on the car on time. I need more history of loan repayment.
I'm thinking about taking a high-ish interest rate loan (7-8%) from my bank and refi-ing my car. I'd pay an additional $200-$300 in interest over the remaining year of the loan contract, but at least I'd have some debt repayment history. And I'm thinking I'm better off doing this now so i don't pay 7% on a $25,000 car, or get rejected for a mortgage later
Have you pulled you credit report.
Something doesn't sound right to me. I don't see why the consigned loan wouldn't show unless it is actually listed with your father as primary.
A cc is a loan and will show as paid per terms even if you never carry a balance. Just need monthly usage. Get a copy of our report and see what it actually says.
Did they give you a letter as to why it was decline fr MC loan?
My opinion is never borrow money for vehicles, but most don't have the patience for that.
Last edited by twilk; 03-28-2012 at 12:21 PM.
hereI don't have "installment loan" history. Yes, I'm the primary on the account. Yes I've checked my credit report.
But then again, you just lost credibility with this statement:
No problem ever getting approved for mortgages at the best rates for amounts that I would be scared to borrow. Refied at 4.375 a few years ago. Not enough of a drop to do it again yet.
I haven't paid a dime of non deductible interest in 25 years, and have made thousands from CCs (more accurately made thousands from using their money).
Hard to believe you can't qualify for just a 5k loan if you are making 50k. Something doesn't add up.
I read through a good bit of that thread, and it sounds like you have just one CC with only a short (under 3 yr) history. I can't even count the number of cc's that show on my report. I have probably 10 open lines now along with a heloc (that i have never used but it shows paid according to terms)
One CC isn't much for them to go on.
I know that sucks, but it takes time, especially now that they have really tightened lending practices.
Paying cash is a far better way to go anyway. Your reasoning about not wanting to drain your reserves means one thing to me. You don't have enough reserve to be buying the bike.
if money is tight enough that you have to get into your reserve fund, then what are you using to pay the monthly nut on the bike. And now you have 10% less than what you would have.
Making 60k a year, it shouldn't be that hard to save 5k up, and far easier when you aren't paying 10% more for things.
The bike isn't the issue, the issue is that if I can't get a puny $5000 dollar loan, there's no ****ing way I'm going to get a $25,000 loan or a $150,000 loan for a house. My thought is that by paying 200-300 dollars in interest, I'd be effectively "buying" a credit score. My payment would only go up by ~$20-$30 per month, I'd never notice the difference, except for when I go to buy something a few years down the road, I have the credit score and history to get a good rate.
I understand what you are saying, and, revolving credit accounts, several of them, paid every month to avoid any finance charge will accomplish what you want.
The amounts of money involved don't even matter. Chris MD covered it very well in the last post of the referenced thread. You need more history, with more than one card.
That doesn't have to cost you a dime to do.
I'd visit www.annualcreditreport.com and pull your credit report from at least 1 of the 3 agencies.
Paying off the loan that they effectively gave your dad won't help build your credit. I believe that that loan can only have either no effect or a negative effect on his and your credit depending on how you make the payments .
You might not be utilizing your credit card in a way viewed positively by the scorers. You want to have two major c.c.'s, not gas cards, not store cards, keep the cards in use every month, do not have a balance higher than something like 80% of your total available credit limit (I forget exactly what the "real limit" is but it's a percentage of your total available amount), and pay them off every month. Some people suggest leaving a small balance of a few dollars to make sure the payment gets posted but I don't do that. This is what I did a year or so before buying a house, and other than an old bank loan, that was all that I stepped up to the plate with besides a real down payment and a real job, and I got lowest prime rates.
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If your name is on your current loan, it should appear on your report(s). Have you checked all your reports? It doesn't happen frequently, but it is possible that a lender doesn't report to all three bureaus. For example, they might report to Experian and Equifax but you check your TransUnion report and don't see it. If it's not on any of your reports and you're positive that your name is on the loan, call the bank and see what's up. Maybe there was a mistake and fixing the mistake could mean an instant three years of car loan history without needing to do anything except make a phone call.
It really doesn't make sense to refinance an almost-paid-off car at a much higher interest rate just for a year's worth of credit history. You can build credit in other ways, and some of them are free.
I wouldn't worry about a denial on a motorcycle loan meaning anything for a car loan or a mortgage in the future. As backwards as this may seem, it's actually a lot easier to qualify for a $25,000 car loan than for a $5,000 motorcycle loan. For a mortgage, they look at SO MUCH in a mortgage application. If you don't have a car loan, that's not an instant deal killer.
"All hail Dr. Chris, doctor of money medicine!" --Tornado2dr
"annuity = financial abortion." --jnm2.0t
they want to see a payment history. doesnt matter if its a CC or a car loan.
what you are talking about doing isnt terrible. because its only a year. but its not needed. you should get the same benefit by getting a CC. making some small purchases on it, and paying it off each month.
since you are concerned about 'credibility'... i killed my credit in college. now my score is 805.
many CC's, car loans and currently holding two mortgages later. i can tell you what matters most is paying your bills on time, every time. CC or car loan. doesn't matter. just use your credit. pay off your credit. your score will increase.
Last edited by dunhamjr; 04-08-2012 at 04:37 AM.
I need to follow this... "Not everything you eat has to, or should, taste really f*cking awesome. Sometimes you need to eat 'boring' food to stay healthy.