Will I be turned down for a car loan?
Considering I'm putting 30% down and having my father cosign is there   any chance I would be turned down for a loan on a $100k car? According to BankRate, the average credit score needed to buy a new car is 714, but they also show average interest rates at 6.39% for new-car loans to people with credit scores in the 601-660 range. High income certainly helps offset credit score to some extent.  Not every bank/dealership does things the same way. Being self-employed you'd most likely be required to show 2 years of tax returns, and they'd use those as a basis for your income rather than whatever you have made recently. If using a co-signer, their income matters. Another key factor is debt to income ratio, if too much of someone's income is already spoken for by other debts a lender will shy away. So, yes, there's a chance, given all the information we don't know and the variability with lender policies, that you could be turned down for a car loan. How should I go about this? If you're set on pursuing the car loan, just go talk to some lenders. You'll want to shop around for a good rate anyway, so no need to speculate just go find out. Include the dealership as a potential financing option, they can have great rates. Personally, I'd get a much cheaper car. Your insurance premium on a 100k car will be quite high due to your age. You might be rightly confident in your earning potential, but nothing is guaranteed, situations can change wildly in short order. A new car is not a good investment or a value-retaining asset, so why bother going into debt for one if you don't have to? If you buy something in cash now, you could upgrade in a few years without financing if your earning prediction holds and would save quite a bit in car insurance and interest over the years between.
A financial institution is not obligated to offer you a loan. They will only offer you a loan if they believe that they will make money off you. They use all the info available in order to determine if offering you a loan is profitable.  In short, whether they offer you a loan, and the interest rate they charge for that loan, is based on a few things: How much does it cost the bank to borrow money? [aka: how much does the bank need to pay people who have savings accounts with them?]; How much does the bank need to spend in order to administer the loan? [ie: the loan officer's time, a little time for the IT guy who helps around the office, office space they are renting in order to allow the transaction to take place]; and How many people will 'default' and never be able to repay their loan? [ex: if 1 out of 100 people default on their loans, then every one of those 100 loans needs to be charged an extra 1% in order to recover the money the bank will lose on the person who defaults]. What we are mostly interested in here is #3: how likely are you to default? The bank determines that by determining your income, your assets, your current debts outstanding, your past history with payments (also called a credit score), and specifically to mortgages, how much the house is worth.  If you don't have a long credit history, and because you don't have a long income history, and because you are putting <10% down on the condo [20% is often a good % to strive for, and paying less than that can often imply you will need mandatory mortgage insurance, depending on jurisdiction] the bank is a little more uncertain about your likelihood to pay.  Banks don't like uncertainty, and they can deal with that uncertainty in two ways: (1) They can charge you a higher interest rate; OR (2) They can refuse you the loan. Now just because one bank refuses you a loan, doesn't mean all will - but being refused by one bank is probably a good indication that many / most institutions would refuse you, because they all use very similar analytical tools to determine your 'risk level'. If you are refused a loan, you can try again at another institution, or you can wait, save a larger down payment, and build your credit history by faithfully paying your credit card every month, paying your utilities, and making your car and rent payments on time. This will give the banks more comfort that you will have the ability to pay your mortgage every month, and a larger down payment will give them comfort that if the housing market dips, you won't owe more than the house is worth. My parting shot is this: If you are new in your career with no income history, be very careful about buying a property immediately, even if you get approved. A good rule of thumb is to only buy a property when you plan on living there for at least 5 years, or else you are likely to lose money overall, after factoring closing costs and maintenance fees. If you are refused a loan, that's probably a good sign that you aren't financially ready yet, but even if a bank approves you for a loan, you might not be ready yet either. "You have a job ""lined up"". What if it falls through? Then you have to sell your fancy car, and you are back to scare, apart from the dough you owe your dad. For consumption items, live within your means. A cheap first car is just fine.   Spend cash where it brings you more cash." There is no need to get an auto loan just to try and affect your credit score. It is possible to have a score over 800 without any sort of auto loan. If you can afford to pay for the vehicle up front that is the better option. Even with special financing incentives it is better to pay up front if you can. Yes it is possible to use the funds to make more if you finance with a silly low interest rate, however it's also possible to lose a job or have some other financial disaster happen and need that money for something else making it more difficult to make the payment.  It may be just me but I find the peace of mind not having the payment to be worth a lot. A loan that does not begin with at least a 20% deposit and run through a term of no longer than 48 months is the world's way of telling you that you can't afford this vehicle.   Consumer-driven cars are rapidly depreciating assets. Attenuating the loan to 70 months or longer means that payments will likely not keep up with depreciation, thus trapping the buyer in an upside down loan for the entire term. Here's my take: 1) Having a car loan and paying it on time helps build credit. Not as much as having credit cards (and keeping them paid or carrying balance just enough to be reported and then paying it), but it counts. 2) Can't you set in your bank, not the lender, something to pay the car automagically for you? Then you will be paying it on time without having to think on it. 3) As others said, do read the fine print. "I somewhat agree to Alex B's post.  I was a finance manager for 7 years both prime and sub-prime(special)(in other words bad).   The parts he's 100% right on.  Hit up you local credit union then your bank.  Get your financing done first if you can.  Now 690 credit score is one of 3 bureaus, not all banks and lending institutions use all three or the same one.  Also the score isn't everything.  That could be good or bad.  The 2-3% range is normally for the 720+ crowd unless its a manufacture.  (GM, Ford, so on)  With rates capping out at around 30% depending on state laws.  However 690 should not be 19% on a new or late model car.  At 690 at 19% you would have be going for a 70,000+ mile 6 year or older car if I had to guess. Assuming you have no BK's and repos.   Some times dealerships have to pay banks to get people financed.  Its hidden in the cost and they by law are not allowed to tell you about it because it cannot be passed on to you.  However the banks don't just fund any crazy amount of money either say like 115% of book and  that it.  That is where and why they want that big down payment because that is used to off set the finance amount and what you pay.  Making the dealership money.  and i can go on and on and on...   But you should always try to get the funding prior.  Your credit union won't charge the hidden fees and they only care about your down payment to see that you are making a commitment.  If you are buying used.  Save out 1500 for future repairs and tires and such.  Don't buy paint protectant and such.  If you finance thru the dealership and put less than 20% down DO buy Gap Insurance but thats it.  I can go on and on but I won't.  Feel free to ask though.   And to answer your original only question with not context. ""Is there any reason not to put a 35% down payment on a car?"" Yes if the money is better served paying off credit cards or long term mortgage, assuming you don't need the write off." Is it really worth the interest you'd pay over a year for a relatively minor and temporary bump to your credit score? I mean, you just bought a car so I'm assuming you probably aren't looking for another loan in the near future. "(I'm a bit surprised that nobody talked about the impact of multiple inquiries on a loan, since OP is concerned with credit building. Probably an answer as opposed to a comment is justified.) Yes. In fact when you shop for auto loan you are expected to have your credit score/report be pulled by different banks, credit unions, and/or the financing arm of the car manufacturer or the dealership, so that you can hopefully get the best rate possible. This is especially true if the dealer is requesting quotes on rates on your behalf, as they would probably use a batch process to send out applications to multiple financial institutions all at once. Yes, and a bit unusual - CALVERT TOYO (your dealer) pulled your report twice on the same day. Presumably they are not getting any new information on the second pull. Maybe a fat finger? Regardless, you should not worry about this too much (to be explained below). I would say ""don't bother"". The idea behind hard inquiries lowering credit score is that lenders see the number of hard inquiries as your desire for credit. Too high a number is often viewed as either ""desperate for credit"" or ""unable to qualify for credit"".  But as explained above, it is very common for a person to request quotes for multiple financial institutions and thus to have multiple hard inquiries in a short period of time when shopping for loans. To account for that, the credit bureau's model would usually combine hard inquiries for a same type of loan (auto, mortgage, etc.) within 30 days. Hence a person sending quote request to 3 banks won't be rated higher for credit than if he were to request quotes from 5 banks.  Therefore in your case your credit profile is not going to be different if you had been pulled just once. my credit score goes down for 15 points I'm assuming you are talking about the credit score provided by Credit Karma. The score CK provided is FAKO. The score lenders care about is FICO. They are well correlated but still different. Google these two terms and you should be able to figure out the difference quickly. You can also refer to my answer to a different question here: Equifax credit score discrepancy in 1 month, why?" "Simple and straight-forward.  ""I'm sorry but I don't co-sign loans.  I've heard horror stories (or had bad experiences if you actually have) about these things going bad and ruining friendships.  Your friendship is more important to me than you getting this car/stereo/whatever.""   You could go on to explain that it's not necessarily a lack of trust in them, but the problem could be cause by things beyond either of your control.  Let's say there's an error at the bank and his payment doesn't get processed on time and it hits your credit score.  Next thing that happens is your credit card company sees the change in your score and jacks up the rate on your card.   Neither of you did anything wrong, but now instead of him just fighting with the bank about the payment not getting processed on time, you are having to fight with your credit card company.  You are both in an awkward situation.  You might get pissed at him (you could make this out to be a failing on your part) even though it wasn't his fault.  Or he might be embarassed to come around even though you know it wasn't his fault and aren't pissed at him." I had a strange experience buying a new car.  They were offering a deal of 0.9% interest on the loan but only if the loan was above a certain amount.  Below that amount, the interest rate was something like 3%.  Given the amount I was willing to put down, it was cheaper to put less down and get the lower interest rate.  So, once you agree to the purchase price, you need to discuss what finance options they offer.  You might also check in advance with other loan providers (e.g. your bank) to see what offers they have. If you buy a car using a loan, the dealer gets benefited by the financing institution by the way of referring fee paid to the dealer by the institution, and that too if the dealer has helped in financing the purchase. Otherwise for the dealer it doesn't matter if one pays in full or through financing. The dealer is paid in full in either cases. Hence the dealer may slightly get disappointed that you are not taking a loan. If you have no credit score it is generally far easier and more affordable to establish credit the cheapest way possible, which is usually in the form of a small credit card (student card if you are a student, low credit line unsecured, or even secured if you need). Your local bank/credit union will usually be keen to offer you something to start out, but you can also apply online to some of the major credit card vendors. As always, look out for annual fees, etc. In general, trying to get a larger loan to establish credit will cost you a lot as you will not qualify for any legitimate 0% or ultra-low APR car loans - those are reserved for people with established and generally pretty good credit. I expect you'll find a car loan that will have a lower APR than you could get investing your money otherwise - especially if you do not have established excellent credit - to simply be a phantom (you won't find it), and even if you could it is more risky than it is worth. Furthermore, if establishing credit is important to you (such as for buying a house down the road), you can build an excellent credit score without ever having a car loan. So you don't have to buy a car on borrowed money just to hope to get approved for a house some day - it's just not a requirement. Finally, I urge you to make a decision on the best car for you in your situation, ignoring the credit score - especially if you are more than 3-5+ years away from buying a house. Everything else about buying a car is more important - the actual cost of the car, year, mileage, suitability for your needs, gas mileage, maintenance and insurance costs, etc.  Then, at the very end of your decision making process, ensure that buying the car would not put you dangerously low on savings by squeezing your emergency fund. Decide if you really need a loan or as expensive of a car, considering the costs over the expected life of you owning the car (or at least the next 2-5 years). Never get trapped into just thinking about monthly payments, which hide the true cost of loans and buying beyond what you can afford to purchase today. Is it possible to get a 0% interest rate for car loan for used car in   US? Possible? Yes. It's not illegal. Likely? Not really. $5K is not a very high amount, many banks won't even finance it at all, regardless of your credit score. I suggest you try local credit unions, especially those that your employer is sponsoring (if there are any). Otherwise, you will probably get horrible rates, but for 3 months - you can just take whatever, pay the 3 months interest and get rid of the loan as soon as you're able. In the UK at least, dealers definitely want you to take finance. They get benefits from the bank (which are not insubstantial) for doing this; these benefits translate directly to increased commission and internal rewards for the individual salesman. It's conceivable that the salesman will be less inclined to put himself out for you in any way by sweetening your deal as much as you'd like, if he's not going to get incentives out of it. Indeed, since he's taking a hit on his commission from you paying in cash, it's in his best interests to perhaps be firmer with you during price negotiation. So, will the salesman be frustrated with you if you choose to pay in cash? Yes, absolutely, though this may manifest in different ways. In some cases the dealer will offer to pay off the finance for you allowing you to pay directly in cash while the dealer still gets the bank referral reward, so that everyone wins. This is a behind-the-scenes secret in the industry which is not made public for obvious reasons (it's arguably verging on fraud). If the salesman likes you and trusts you then you may be able to get such an arrangement. If this does not seem likely to occur, I would not go out of my way to disclose that I am planning to pay with cash. That being said, you'll usually be asked very early on whether you are seeking to pay cash or credit (the salesman wants to know for the reasons outlined above) and there is little use lying about it when you're shortly going to have to come clean anyway. Cars are not houses.  The comparison is apples to oranges.   Bad car loans actually can be good business for car dealers.  When someone defaults on their car loan they very quickly lose the car.  That car is then resold.   Default on a home loan and you don't even have to leave the house, and there is no way for them to take the house back from you.  It often takes a year or two for the bank and lawyers to get you kicked out of the house.   A car however is on wheels, it can easily be moved and taken back.  This article is some poorly researched 'sky is falling' click-bait.