So today I ordered a hidden inventory model 3 for 33.5k that was a really good deal, however I am a bit worried about getting financing. My credit is bad (550-600), and I was planning on getting a co signer with good credit until I realized their name would need to be on the registration. So the question is will I get approved? I am planning on putting 25k down, which is nearly 75 percent of the car's price. With this in consideration, I feel it would be unlikely to get declined, but I am not entirely sure. Not looking for advice on what I can or can't afford etc. Thank you.
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Will I get approved?
- Thread starter Sags224
- Start date
Michelle_eriw
Member
I think that with that large a downpayment, you have a very good chance of getting approved.
Thats what I was thinking, even with my crappy credit. I have someone else with 720 that could do the loan as well, but they have a bankruptcy within the last few years so they wouldn't be great either. But good to know theres people that agree I should get it with the massive down payment. (plus their minimum financing amount is 10k, which is actually more than I was planning on financing, so I hope thats a good thing for me)
Michelle_eriw
Member
Is this from Tesla loans? I think their minimum is $4500 down. And their interest rate is 2.49%
RedWhite19
Member
A bigger down payment is essentially a good faith gesture on your part. Your rate will probably be a bit higher but since you’re putting such a large down payment, you’ll pay it off in no time. I wouldn’t worry too much.
Yeah I think its 4500, but I am talking about minimum you can finance. Meaning on this 33.5k car, the most I can even put down is 23.5k.
Your credit score is just one of the things they look at when determining whether or not you qualify for a loan. Another big consideration is your debt to income ratio.
This is a bit of a ridiculous example, but it illustrates the point:
Let's say you make $10,000 per month, and your house payment is $9,000 per month. Now you apply for a car loan which has a monthly payment of $1,000 per month. You're going to get turned down, regardless of how good your credit is. Why? Because your total monthly debt service is equal to your total monthly income.
Once your monthly debt service exceeds a certain percentage of your monthly income, you won't get the loan, regardless of credit standing or the amount of the down payment you put down on the car.
I haven't looked into such things in many years, but your credit score would often affect the debt to income ratio "ceiling." The ceiling being the max debt to income ratio a lender would let you have and still qualify for the loan. People with bad credit would have a much lower debt to income ratio ceiling than those with good credit. And as I said, it has been years since I've looked at such things, and don't know if credit score is still used in determining max debt to income ratio.
This is a bit of a ridiculous example, but it illustrates the point:
Let's say you make $10,000 per month, and your house payment is $9,000 per month. Now you apply for a car loan which has a monthly payment of $1,000 per month. You're going to get turned down, regardless of how good your credit is. Why? Because your total monthly debt service is equal to your total monthly income.
Once your monthly debt service exceeds a certain percentage of your monthly income, you won't get the loan, regardless of credit standing or the amount of the down payment you put down on the car.
I haven't looked into such things in many years, but your credit score would often affect the debt to income ratio "ceiling." The ceiling being the max debt to income ratio a lender would let you have and still qualify for the loan. People with bad credit would have a much lower debt to income ratio ceiling than those with good credit. And as I said, it has been years since I've looked at such things, and don't know if credit score is still used in determining max debt to income ratio.
Michelle_eriw
Member
Do you mean the most you're allowed to put down, or the most you can afford to put down?
what I was trying to get at is if you're looking to borrow elsewhere, check interest rates. If they're higher than 2.49%, try applying for Tesla's financing.
They used to look at that on mortgages but I’ve never seen them check debt ratio for a car loan. Might vary by bank.
Thats the most I am allowed to put down. So if I am putting the most I possible can put down, I feel like that makes my chances even better. And I am going to try just through tesla at first, but if I get declined I will look elsewhere. I'm sure I can find somewhere to give me 10k.
Michelle_eriw
Member
Good luck; I'm sure you'll be able to find someone, and I'm pretty sure that Tesla will approve you. If you're a veteran, you could try USAA as well; they're usually competitive, and may even be lower than Tesla.
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