Penfed approval/financing question

[87irocz]

Just goes to show you have to look around. I have had good credit for the last 3 years and a government job for the last 15. However, I had a bankruptcy 3 years ago. I tried several different financing options (USAA, Capital One, Associated Credit Union & Navy Federal). Navy Federal was the only one to approve a $34000 loan for me at 6% for 60 months. I even financed my wifes Scion through Navy Federal just a year after my bankruptcy, but the rate was 9.75% for 48 months on that one. So, Navy Federal has always done me right.

[Fast Eddie]

Originally Posted by shane

Hey guys,

I've been lurking the forum here for a few weeks, and have gained a great deal of knowledge here. (I also tend to find myself browsing the "color" threads here for hours at a time trying to decide what color I want to order my 2SS in. )

Anyway, here's my question...

I recently opened an account through Pentagon Federal Credit Union, since they're who I'm going to try to take the loan for the Camaro with when the time comes.

I do have a few questions though, that I tried searching for, and couldn't find the exact answers I'm looking for. Hopefully you guys/gals can help.

1.) I realize that by ordering this car, there will be a several-month wait time involved. How does one going about ordering and financing the car like this? I have read that the dealer will typically require a deposit of $2000-$3000 for them to order the car. This isn't a problem. The concern though, is that I don't want to put that money down, not knowing if I can get financed when the car comes in. Does PenFed allow you to apply for a loan on a car that hasn't actually come in yet, and one which you don't have a VIN number for? If so, how long is the loan approval valid for? What would happen if the Camaro doesn't come in before the loan approval expires?

2.) I'm 22, and have a decent credit history for my age. I have a few credit cards with decent credit limits that I have had for a few years, all of which have next to nothing balances (will be paid off completely in a few weeks). My credit score is currently 677, and I expect it will be in the 700+ range as soon as I pay off my 4 wheeler (I currently owe about $2500 on it, but will pay it off within a couple months). I've ran all the FICO simulator tools on MyFico.com, basically inputting in that I will pay off those balances within 3 months, and it estimates me to be in the 710-725 range by then.

I have a good job, and make around $35,000 annually. I don't have a house payment or rent, so my only payment will be the car loan and cell phone. With that said, what are my chances of getting approved, with approximately $5000 down payment?

I doubt they will approve you. A $35K car (one year's salary), with $5000 down is a $30,000 loan, IF you pay taxes, title, etc from you own money. If you add them to the loan or reduce your down payment your loan goes up. $30K at 4% for 60 months is a monthly payment of $552. Assuming you take home 70% of $35K (after taxes, SSI, insurance, etc) that would be roughly 27% of your take home pay. That is the max for a HOME loan (or used to be) so for a car, not likely. Plus, they take into account that the day after you get the car you could go out and max out all your credit cards in parts and have all of those payments, not saying you will, but that is how responsible banks think, plus you could get kicked out (assuming you do not own your home) and have rent, etc. A lot can change over the five year life of the loan. I'm not trying to be a jerk, just inform you to the reality of the situation. If you have been making payments on accounts on time and what not who knows. Apply and find out.

Originally Posted by shane

3.) And my 3rd question...

How exactly does the loan process work on a car? I've never been through this before. Say the MSRP is $35,000. I've paid the $3000 for them to order the car for me, and when the car came in, would have an extra $2000-$3000. How much would I need to try to finance ahead of time to cover the tax/title, fees, and all of that crap? And do all of those fees get paid at the dealer, or is it something you pay the state or DMV when you register your car?

Sorry for all the questions, I'm just a little confused since I've never done this before. The only new thing I've purchased was my new 4 wheeler when I bought it 2 years ago.

Thanks in advance for your help. And I appologize that if this post was in any way incoherent. It's 3AM as I write this, and bed is calling me, lol. Anyway, this forum is awesome...and I've already learned so much here. Hoping to learn so much more.

-Shane

The loan process, basically, works just like on your four wheeler. If you have $35K car and put $3K down you will own $32K when you take delivery. You also have to pay sales tax, property tax (if your states has it), title, etc. That will probably run a couple grand. If you pay that from cash on hand great, otherwise you can pay it with funds from the loan, and add it to the principle. It all works out to be the same loan amount either way, paying from cash or larger down and paying from loan. Some of the fees can be paid at the dealer and some have to be taken to the DMV, it varies by state.

Good luck!