When getting a car loan, is the DTI (debt to income) ratio important?
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I need a new car soon but I’m leaving my full time job to go to school. I plan to live off of student loans but I’m concerned about getting a car loan after I have such little income. My credit score is over 700. Is DTI really important with auto loans, or does it vary by bank?
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CreditCards.com said:
It varies by bank.
Mortgage lenders consider your income very closely. Debt to income ratio is deeply ingrained into the decision (it is now, and it used to be before the subprime debacle.)
FICO really doesn’t consider your income ratio. They heavily consider your debt to credit limit ratio, which is different.With auto loans, it’s all over the place. Many consider your income.
To be considered positively by the greatest number of lenders — and therefore increase the odds of getting a good rate — I’d suggest you get the loan before you quit.
Good luck!
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0February 16th, 2010 at 7:18 pm -
SDD said:
Because a car loan is semi-secured, lenders tend to be less picky than on an unsecured loan. Nonetheless your lack of income increases the risk to the lender and, presumably, the rate at which they would be willing to loan.
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0 0February 16th, 2010 at 7:18 pm -
mojo1969 said:
Yes anytime you take out a loan they take into account income , credit history and debt to income ratio. if your debt exceeds your income, they will not give you a loan. Your debt should never exceed 75% of income.
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0 0February 16th, 2010 at 7:18 pm -
xbluebellax said:
Yes, that is something that all lenders use to consider granting a loan….to some it’s more important than others. It’s less important here because they can always repo it if you don’t pay…but yes, it does factor in.
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0 0February 16th, 2010 at 7:18 pm -
Enjoy Life! said:
When getting a car loan, some lenders will ask to see your most recently check stubs. It depends also how much you are putting down and the amount of your loan. The lender will also look at your credit score. Your credit score is pretty good, please read your contract carefully.
Also, when getting a car loan, shop around. You’ll get a better rate (usually) if you go will someone outside the dealership. Dealerships usually offer you financing, but the rates are usually much higher. Try a credit union, or a local bank when you do your banking.
Also, try to have some reserves just in case unforseen things come up. You don’t want to be late on a car loan, that really hurts your credit score. I have a business, that helps people repair their credit.
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0 0February 16th, 2010 at 7:18 pm -
Kinley said:
Car loans are a dime a dozen, but which one should you go for? Especially if you are a prudent consumer with a balanced budget, getting the right auto finance can be quite a challenge, what with so many auto finance providers<!–thrusting their offers in your face. Your dealer may even offer to do it for you. While this sounds really tempting, it may prove to be a costly affair. So do your own thing and check out the auto loans yourself.
http://badcreditloans.awardspace.com/
You can get these loans from a variety of sources, like banks and financial institutions and online financing companies. Dedicated auto finance companies usually offer better terms if you approach them directly rather than–>through some middleman. You should also keep in mind that your credit rating affects the interest rates and the amount of advance you can easily get, so if the picture is not too good on that front, you can begin by working towards improving your credit rating.
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0 0February 16th, 2010 at 7:18 pm
