Evo X ownership dreams are over...
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Joined: Sep 2008
Posts: 45
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From: chicago
I can explain why he got declined as I am a finance director at a Acura dealership.
Please don't get upset or take this the wrong way but here are several reasons without looking at your credit report.
You mentioned you have 6 credit cards and 1 loan. That is a total of 7 trade lines which is not bad, but a few factors to consider. How long you have been on file meaning time in bureau. Which is the start date of your first account was issued. Most lenders have been looking for at least 4-5 years.
Reason being they want to see a pay history of a significant time. This will give the lender a good idea of your pay history over a range of time not just a short amount of time.
Credit cards are not a good indicator of pay history. They are considered revolving debt. CC companies unlike loans have various minimum payments which does not give the lender reviewing your file a fair basis to see your pay history. i.e. some cards only require a very small payment per month even if you owe a large balance. As where installment loans you are required to make a min payment for a set amount of time.
Now yes you have had a loan for 14k, but when you are looking to double your previous loan amount they have no basis for judging how you will pay a loan for double your previous amount. The other thing that hurt you is that you paid it in 6 months. Pay history is very important in deciding if you qualify for another loan. The lender does not know you paid it early they assume it may have either of been paid off early for several reasons: you sold the car, your traded it, or you paid it off early. They dont see that it was you who paid it off early. It is key to make at least a year of payments to show you can handle paying an installment loan (installment loans are loans on vehicles, motorcycles, etc)
I do admit your score is excellent, but score is not everything anymore. Some lenders look at more than score, most lenders look at more than score. From what you stated Honda Finance would not approve your loan based on what you put in your post.
Lenders are not lending money like they used too, but there are other choices if you really want the Evo X. There are lenders will to do business with people like you in your situation.
Some other factors lenders look at are debt to income ratios, and available debt.
Available debt is basically this. If you have 7 trade lines like you do which include the loan which is paid off, and you have a total high credit limit of 10k (meaning if you add all your total credit card limits up) and you owe 7k in credit card debt you have less than 30% available. This is a big no no for creditors unless you have a income to justify it. The closer you are to your credit limits on credit cards and loans the less likely you will get approved.
Also back to the credit card thing. If all your accounts have low credit limits that could have also of stopped you from getting approved. You may find someone that has a similar credit profile but the limits of the credit cards were higher. They have a better chance of getting the loan if the balance are low. That is because the available debt is higher.
Lenders also look at income, job history, and believe it or not how long you have lived at your home.
They want someone with good stability on the job and at home.
Your income could have also been a deciding factor most lenders do not want to lend more than 10-20% of your monthly income. Meaning if you make 3000 a month (gross) most lenders will want you at a 300-600 payment. But the percentage depends on your total credit profile and history.
2 years on the job and at the same house is always a good thing. That is why when you fill out a credit application they ask you if you have not lived and worked at same places for 2 years to supply your previous job, and residence info.
I can go on and on I hope this helps everyone. If anyone has any questions or needs help with a loan pm me and I will do my best to help.
But dont lose hope again there are plenty of lenders wanting to borrow money. Some dealers dont have access to these lenders. And if you have a credit union that you belong too or if you work does try them. I know it wont be a 0% loan but if you want the car you gotta do what you gotta do.
Please don't get upset or take this the wrong way but here are several reasons without looking at your credit report.
You mentioned you have 6 credit cards and 1 loan. That is a total of 7 trade lines which is not bad, but a few factors to consider. How long you have been on file meaning time in bureau. Which is the start date of your first account was issued. Most lenders have been looking for at least 4-5 years.
Reason being they want to see a pay history of a significant time. This will give the lender a good idea of your pay history over a range of time not just a short amount of time.
Credit cards are not a good indicator of pay history. They are considered revolving debt. CC companies unlike loans have various minimum payments which does not give the lender reviewing your file a fair basis to see your pay history. i.e. some cards only require a very small payment per month even if you owe a large balance. As where installment loans you are required to make a min payment for a set amount of time.
Now yes you have had a loan for 14k, but when you are looking to double your previous loan amount they have no basis for judging how you will pay a loan for double your previous amount. The other thing that hurt you is that you paid it in 6 months. Pay history is very important in deciding if you qualify for another loan. The lender does not know you paid it early they assume it may have either of been paid off early for several reasons: you sold the car, your traded it, or you paid it off early. They dont see that it was you who paid it off early. It is key to make at least a year of payments to show you can handle paying an installment loan (installment loans are loans on vehicles, motorcycles, etc)
I do admit your score is excellent, but score is not everything anymore. Some lenders look at more than score, most lenders look at more than score. From what you stated Honda Finance would not approve your loan based on what you put in your post.
Lenders are not lending money like they used too, but there are other choices if you really want the Evo X. There are lenders will to do business with people like you in your situation.
Some other factors lenders look at are debt to income ratios, and available debt.
Available debt is basically this. If you have 7 trade lines like you do which include the loan which is paid off, and you have a total high credit limit of 10k (meaning if you add all your total credit card limits up) and you owe 7k in credit card debt you have less than 30% available. This is a big no no for creditors unless you have a income to justify it. The closer you are to your credit limits on credit cards and loans the less likely you will get approved.
Also back to the credit card thing. If all your accounts have low credit limits that could have also of stopped you from getting approved. You may find someone that has a similar credit profile but the limits of the credit cards were higher. They have a better chance of getting the loan if the balance are low. That is because the available debt is higher.
Lenders also look at income, job history, and believe it or not how long you have lived at your home.
They want someone with good stability on the job and at home.
Your income could have also been a deciding factor most lenders do not want to lend more than 10-20% of your monthly income. Meaning if you make 3000 a month (gross) most lenders will want you at a 300-600 payment. But the percentage depends on your total credit profile and history.
2 years on the job and at the same house is always a good thing. That is why when you fill out a credit application they ask you if you have not lived and worked at same places for 2 years to supply your previous job, and residence info.
I can go on and on I hope this helps everyone. If anyone has any questions or needs help with a loan pm me and I will do my best to help.
But dont lose hope again there are plenty of lenders wanting to borrow money. Some dealers dont have access to these lenders. And if you have a credit union that you belong too or if you work does try them. I know it wont be a 0% loan but if you want the car you gotta do what you gotta do.
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