I guess the universe doesn't want me to buy a fit. I just quoted myself for New auto financing from Light Stream and got Declined. Now I finally was able to see the reason and its because of Debt to income ratio, and debt owed on existing account.

I have a credit score of 835 and almost no debt (~$600) on credit card this month. Felt like they were scamming me to have me submit my information with no intention of approving. I know I'm in the upper 1 percent in terms of fiscal responsibility.

 

 

Won't getting turned down for financing knock down your credit score?

 

Not sure but I'm still at 835. It was quite shocking that I got turned down for such a small loan with 5k down. Also they didn't have the best rate either. Pen Fed is significantly lower if anyone is in the market for a auto loan.

 

a guy with 835 cant get a loan? dat is odd. but a guy with 835 needs to get a loan to buy a GK is kinda odd to me as well.

 

Lol I invest in the market so I rather get a loan than to liquidate my stock holdings. The rates are decent < 3%APR. I can usually get > 6% return safely. so that's why I want the loan.

 

I had to look up what lightstream was so forgive my ignorance. What's the benefit of using them versus a traditional credit union? Are you on a fixed income? If so that can explain them possibly declining.

When I bought my Fit, I had a score of around 830 and I got a loan for the GK. I could have paid "cash" but why bother when the interest rate at the credit union on the car was 1.49% At that rate, it's almost like borrowing money for free so I understand why you'd prefer a loan versus liquidation assets.

 

I don't believe it...

 

Having a high credit score doesn't necessarily mean you have a lot of money...

 

They have no restrictions on where you buy the car, what year it is and how many miles are on it. You could borrow 15k and buy a model T with it. They also allowed me to keep the title because "it just adds extra paperwork" and they know that I will pay them because I want to keep my credit score up. No membership fees if your local credit union requires that.

At the time when I bought my Fit their rates were the lowest. I had enough in savings to buy it outright but for such a small rate ill keep my money and borrow theirs.

 

The debt/income ratio is what's getting in your way. The best credit score possible doesn't help you if you don't have the income to pay off a debt, at least in the mind of the lenders.

 

why don't you just buy the car with Honda's financing which is probably lower interest anyway?

Unless you're one of those "I NEED THE TITLE IN MY HAND" bros.

 

Me too. Debt to income ratio has a direct bearing on credit score, and therefore credit worthiness. Something is amiss here.

 

No, it does not. Debt to income ratio has nothing to do with your credit score. 3 main factors contributing your credit score are credit line utilization, payment history and any derogatory marks or your report such as missed payments and collections.
Now, banks can and will use your debt and compare to your income. So if you got 90% credit card utilization and you are $30K in debt but only make $30K a year, then bye-bye to your loan.

 

Go through Honda Finance. You won't beat their rate. And they are great to deal with.