 |
Ask Dr. Don
By
Don
Taylor,
Ph.D.,
CFA
•
Bankrate.com |
Used-car financing
Dear Dr. Don,
I am in the market for a used car and am working
on determining the best financing. While I have debt due to some recent
periods of unemployment, my credit score is good (above 675 with each
of the three bureaus). I am currently unemployed and am buying this
car for a new job that I'm starting in two weeks. What is my best
financing option, given my current situation?
Lucinda Loan
Dear Lucinda,
Lenders, even secured lenders, look at more than just your
credit score when approving a loan. They also look at your income.
It is part of the 5 C's of credit: Character, Capacity, Collateral,
Consideration and Conditions. Income is the capacity part of the
equation.
Even the subprime lenders advertise that "if
you have a job, you drive." You'd be much better off waiting
a couple of weeks until you have your first payroll check to show
evidence of your income rather than trying to finesse the issue
today.
I'm assuming that you're currently without a vehicle. If that's
the case, I'd recommend that you look to other transportation for
a couple of weeks rather than buy something now. Is public transportation
an option? Can a friend or family member drive you back and forth
from work for a couple of weeks? Failing that, can you afford to
rent a car for a week or two?
Will your new job make you eligible for membership
in a credit union? A credit union car loan with your new employer
is likely to be your best source of financing for your used car.
Otherwise, you can shop
used car loan rates on Bankrate.
I'd much rather have you find a way to make it through
the next few weeks without buying a car rather than having to answer
your letter in two months in which you ask me how to refinance your
12-percent car loan.
-- Posted: April 29, 2004
|
