Overhaulin'

A FICO of 720 gets some of the best car loan interest rates, so, how does high credit debt increase the rate?

I'm looking to buy a car in the next few months. I've read and heard that a score over 720 gets the best interest rates. Let's suppose I have 720 credit rating and 80% credit debt and only 20% available credit. (Cards almost maxed out). How does this affect the interest rate? Will I even be approved?

Public Comments

1. If you are trying to get a Auto Car Loan and you know that your credit is not the best then you do not need to worry because getting a Car Loan even with bad credit is not that hard. Most lenders know that people nowadays have taken some hits on there credit and they have made it easier to obtain a Car Loan even if you credit is bad. http://www.worldbestloans.com/guaranteed-car-loan.htm When getting your auto loan be aware that you may be required to pay a higher interest rate because the lender will look at you as a higher risk with bad credit. It is important to understand that even though you have a higher interest that as you make your monthly payments on time this will help raise your credit score and then you can always refinance it at a later time.
2. You have the ability to borrow money. Unfortunately, you have *already* borrowed money (those maxed out credit cards), so the remaining amount of debt load is going to limit the amount you can borrow and/or the rate you'll pay. Yes, the car lender will figure that you are more like to pay him than an unsecured credit card, there's no guarantee you will.
3. Banks look at not only score, but your debt to income ratio. So 80% usage is not a big deal unless that balance and applicable payment is a huge chunk of your monthly income. If your income is being dragged down by lots of other debts, they may just decline you altogether regardless of your credit score. Banks have their own formulas, so you can't predict what their requirements are outside of credit score. We declined a loan one time for a customer with a score of 810 because even with a great score, all his income looked be siphoned off with other payments. You can see on a credit report all the payments that are due on his debts. Then you have to use a general rule of thumb to factor in groceries and daily expenses. If we made the loan, he would not have had the money to pay everything as well as daily living expenses.