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Bad Credit / No Credit / You work? You Drive! (?)

6564 Views 10 Replies 7 Participants Last post by  bmwKbiker
I'm looking to buy an '05 X3. I have an '05 Ford Explorer that I want to trade in, in order to get the X3. Problem is, I'm upside down in my current vehicle loan. When I read the ads of dealers advertising as in the title of my post, what's likely to happen? Will they absolutely require of me a down payment? Or, will it depend on the value of the trade in minus the upside down factor?

My credit score?, as an indicator, I've been already turned down by BMWFS.

What are my chances on getting a deal thru?
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There are other lenders the dealer can use butthe interest rates will be higher plus you might need to put some cash down.The lender will also want to be sure you can repay the note.

Can you sell the Explorer via private party and get more money so you're not upside down ?
I'm looking to buy an '05 X3. I have an '05 Ford Explorer that I want to trade in, in order to get the X3. Problem is, I'm upside down in my current vehicle loan. When I read the ads of dealers advertising as in the title of my post, what's likely to happen? Will they absolutely require of me a down payment? Or, will it depend on the value of the trade in minus the upside down factor?

My credit score?, as an indicator, I've been already turned down by BMWFS.

What are my chances on getting a deal thru?
I have a 2005 X3 for sale (mother-in-law's). PM me if you're interested.
While there is always someone willing to lend money on a paystub and title, these aren't the kind of loans you really want sign for.

Someone needs to get paid to take on the (apparent) extra risk. You are going to pay for it, either thru an excessively high interest rate or overpaying for the used vehicle.
Is the Explorer actually at the end of its useful life? I won't give you a lecture, but my recommendation is that drive the Explorer till your no longer underwater or investigate less expensive reliable transportation. An 05 is likely to be in the mid 20s and also at the end (or very near to it) of its original factory warrranty.
I dont know if this helps but i have a very high credit score... in the high 700's, no outstanding debt (credit card, student loans, mortgage, auto loan) and i was turned down as a result of the economy, they required me to put more money down was all. The lender (BMW Financial) wants to know that they will recover the $$ at the end is all. Understandable based on the current economic crisis.
My Explorer has 67K miles and is in pretty good shape mechanically and the usual minor blemishes for a 4 year old vehicle. The x3 I want to get has more or less the same mileage as my Explorer and my current auto loan is at 14% APR.

Yes, I guess I could try and sell it via private party, but I want the quick fix, especially with this car.:)

I will be visiting a dealer today that has the x3 I'm looking for. If somehow I can get financed, I will not accept any deal that will put me over a $100 a month more from what I'm paying right now. I want an x3 bad, but not that bad.:tsk:
I don't want to discourage you and this is a car forum and not a finance forum. The X3 is a nice car and you would greatly enjoy it but you will pay way too much for it.
Paying 14% interest on your current car loan shows that the last dealer took advantage of you and he probably just got the payment down by giving you a longer term and now you are upside down.
Never look at monthly payments when you buy a car, always look at the interest rate and total cost of the loan.
It is not a wise financial decision to buy a depreciating asset on credit except if you get very advantageous interest rates.
Ok, now let me get off my lecture :)

Your best option is

Sell the Explorer and eat the upside down loss. Buy they BMW and look at car loans from credit unions. Do not go the dealer without knowing what car loan you could get. Especially look at credit unions. Here is a good credit union (easy to join) with low rates :

https://www.penfed.org/productsAndRates/loans/vehicleLoans/autoLoans.asp

If you can only get a 14% car loan I would not buy the car. On a 5 year loan you would pay close to 35k for a 25k car.

Also your X3 will be out of warranty and repairs on a BMW are not cheap.
Thank you all for the replies. I'll be driving to the dealership today and see what kind of deal I can get. This is not my first auto purchase, as a 46 year old adult I have bought cars before, with way better credit than I have now.

I'm also educated in the tricks dealers use to get the most out of my situation. I've almost always have gone out and gotten a car pre qualified with a credit union loan, at very good rates.

My situation is such now that, while money is tight, things will vastly improve within the next 6 months. I just want to buy now because the X3's available out there now, are in the year / mileage range that I've researched and will be a good value for the amount I'm looking to spend and afford.

It sure will be a bummer for me if I can't drive out of that dealer today in my X3, but then again I won't be out of a ride and my Explorer is still in great shape plus I won't have to worry about the unexpected maintenance pitfalls of the X3.
It is your decision, but would it kill you to wait six months?

You posted some good reasons to wait. Why not focus on raising your credit score and paying down the current loan.
My situation is such now that, while money is tight, things will vastly improve within the next 6 months. I just want to buy now..........

It sure will be a bummer for me if I can't drive out of that dealer today in my X3, but then again I won't be out of a ride and my Explorer is still in great shape plus I won't have to worry about the unexpected maintenance pitfalls of the X3.
+ 1

A 14% loan is, especially in this market, hideously expensive. If you are upside down, even if you can get financed, that negative equity will be like a monkey on your back, especially if you are going to get a car that is out of warranty and expensive to repair. You may be better off taking any extra capital you have and applying it toward your current car so you can sell the car for at or above the loan value. Then you have a clean slate and can look at a CPO'd X3 that comes with a good warranty and a much better interest rate.

There will always be more great deals.
It is your decision, but would it kill you to wait six months?

You posted some good reason to wait. Why not focus on raising your credit score and paying down the current loand
The formating sucks but you can run this yourself.
This is an example of $22000 borrowed at 14% over 48 months.

In the first year alone you end of paying $2800 in interest.

Amortization Table for $22000 borrowed on Dec 31, 2009 (in dollars)
Month 1 2 3 4 5 6 7 8 9 10 11 12
Payment $601.18
Principal Paid 344.52 348.54 352.60 356.72 360.88 365.09 369.35 373.66 378.01 382.42 386.89 391.40
Interest Paid 256.67 252.65 248.58 244.47 240.31 236.10 231.84 227.53 223.17 218.76 214.30 209.78
Total Interest 256.67 509.31 757.90 1002.36 1242.67 1478.76 1710.60 1938.13 2161.29 2380.05 2594.35 2804.13
Balance 21655.48 21306.95 20954.35 20597.63 20236.76 19871.67 19502.32 19128.67 18750.65 18368.23 17981.34 17589.94

If you are in the last year or two of the loan on the Explorer, it is not so bad an most of your money is (finally) going to pay down the principle.
A 14% loan is, especially in this market, hideously expensive.
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