Quote:
Originally Posted by matt2112
the only credit history i have is from credit cards, which i've always paid on time. i was approved right away by nissan financing, which was a shocker to me considering my limited history.if, however, i had been denied, i would not have been raging mad at nissan.
their decision to deny you makes COMPLETE sense. would you loan someone with no history of paying back large sums of money (student loans DON'T count in terms of credit history) tens of thousands of dollars? i certainly wouldn't.
having said that, don't give up on a great car like the Z just b/c you're pissed that your app was rejected. look for alternate financing and pick up the Z!!  |
There are two types of debt they (issuing banks) look at:
Revolving credit (credit cards)
Non-revolving credit (bank loans, payment history w/ bills)
With credit cards, they look for revolving credit history first, then non-revolving, then compare that with debt-income ratio, how much available/approved debt percentage you're using, and current assets you have in the bank. Then they determine how much they'll approve you for, and the APR.
With a car, primarily they look at non-revolving credit history, if that's favorable they look at your debt to income ratio - combined they come up with an APR to insure they get their money's worth for loaning you the money to get the car, JUST IN CASE you default - so they can cover the expenses of collecting the car. The higher the APR, the more likely/earlier they think you'll default. In addition to those checks, they also do the ones mentioned with credit cards, however, since cars are a titled asset, and the title itself is securing the loan, tyically it's easier to get approved, and will typically have a lower rate than a credit card.