Those who are good at getting good interest rates for loans

[sarasbluegroove]

Hi,
I figured i would put this in off topic since it's more about money than cars. I am loan shopping and have some questions. First, I am 24, have been employed full time for almost 5 months (am on contract but am fairly sure i will be hired permanently in Dec when my contract is up), i am an engineer with a good salary. I have never had any debt before, have 1 department store credit card that is the only source of credit i have (which is perfect because i've paid everything off ASAP). I've lived at home forever except the year i lived in Germany, but that info wouldn't transfer to my american bank account, so i don't think it counts. So i haven't really rented an apartment or anything, have a car already paid for (1998 corolla) so no payments on that ever.

What kind of rate can i get from this info? I'm assuming i can't qualify for the best rates because i haven't really proven that i can pay anything off, even though i don't have debt. Right now BOA has offered me 3.73 and another credit union offered me 3.69 (i think it was for 36 months). Can i get better? Ideally i want to do early payments and pay it off sooner rather than later. Anyone have experience with loan companies that don't have early payoff penalties?

I've applied to pentagon federal credit union and Navy Federal Credit union (both are going to send me something i think? it says i'm approved but hasn't given me info on what rates and how much) and I've joined USAA, but it says i'm not eligible to apply for a loan (going to call because i have no idea why that would be). Advice? I need a new car soon so i can at least sell my old car for some money. I'm sick and tired of worrying about my old car finally breaking down, or just problems in general. Thanks!

[Dave]

"I have never had any debt before, have 1 department store credit card that is the only source of credit i have (which is perfect because i've paid everything off ASAP)"

No credit history can hurt your credit score just like bad debt can. The score seems to favor people who carry a small but consistent load of debt, as it indicates that they will be a steady source of income for a lender, as opposed to a person who keeps their balance at zero (because then the lender is not making any money from interest off of them).

Bring whatever your lowest rate is with you when you go and buy your car and see if the dealer financing can match it. Also, I believe only active and retired military are eligible for loans through USAA, but everyone is eligible for their checking/savings accounts.

[sarasbluegroove]

This page gives eligibility, but it's not very clear. When i joined i read over and over that the only thing i'm not eligible for was the insurance. I'm going to be super mad if that's not true.

https://www.usaa.com/inet/pages/why_...se=eligibility

[SkyriderAR]

Eligibility depends on which group you fall into. If you are in the "Other Individuals" category the banking services are limited. I didn't see loans listed. Auto insurance is also limited to NC and NH in that same category.

[sarasbluegroove]

Ok well that might be out then, back to the original question...

[Velosteraptor]

A good credit rating is achieved through diversity in the credit accounts you have, (loans, regular credit cards like MC or visa, store credit cards, credit line accounts), and an established history of on-time dept payments.

It's too late to do anything to positively affect your credit rating for this loan but for the future...

You will benefit from having a regular credit card (MC or visa), BUT note that opening new credit card acounts can drop your credit score slightly temporarily.
So open one of these after you get this loan and then it will help raise your score for your next loan application (if you use it now and then and keep it paid on time).

This new loan will raise your score too once you start paying it on time monthly. It's actually a good thing for your credit rating to have a little dept, so don't feel rushed to pay this loan off.

[SkyriderAR]

You need to get your credit report and score. The three credit bureaus will give you a report once a year, but without score. You can pay them for the score or get a good approximation free from Quizzle.com. Length of time accounts are open is important, as is the ratio between available credit and outstanding balances. With only the one credit item, you may very well have to settle for an interest rate of 3.5% or so. I would take what loan is offered right now, then work on steps to get your score higher so that you might be able to re-fi at a lower rate. Lowest rates are generally available to applicants with scores in the mid 700 range or better.

Of course, paying your bills on time is critical also.

[sarasbluegroove]

I do have a credit card with BOA, but unfortunately i opened it before i went over seas for a year (to make higher payments with it that my debit card wouldn't allow) however i had the most trouble activating it and using it, they kept shutting the card down because i was using it somewhere strange, and it was impossible for me to call them because of the time difference. Plus it managed to get hacked the first payment i tried to put on it (which never went through) so i thought i cancelled it, however i still have the account when i log onto BOA. That was my experience with a credit card, not a happy one.

I did look up my score, and it showed my payments i made with my department store credit card, and it said my score is 760, however that's with like 4 payments. I don't know how credible that is.

Is there anything i can do now to find the best rate? When i get pre approved for a loan online, can i have that rate decreased when i go and talk to a person at the bank? Will a car place offer me a lower rate if i bring in one i'm already approved for?

[SkyriderAR]

The last question...it depends on what banks the car dealer has arrangements with. In my case I went in with 3.25% preapproved through USAA and asked the dealer if they could do any better. I wound up with 2.4% with Citizens Bank on a loan for about 50% of the car's price over 5 years. Go in with your approval and ask them to beat it. Worst case you go with your own deal.

Keep in mind Hyundai is offering $500 if you finance through them. You need to look at any rate they may offer with the discount when comparing other offers.

[FredFudpucker]

I worked out a special financing plan that came out to 0.0% Interest over 0 months. I only had to put $25,000 down. At least now when I say "my car" I really mean "my car".

[Nixiemaiden]

i thought i cancelled it, however i still have the account when i log onto BOA. That was my experience with a credit card, not a happy one.

For some reason, Bank of America shows accounts on their online banking that have been closed.

It should show up on your credit report that it is cancelled though if you can pull it from annualcreditreport.com.