Car loans

I was wondering if I could qualify for an auto loan at the Federal Reserve for a new car. I’m planning on putting down a 20% down payment and taking out a special balloon payment at the end for 25% of the total value. My income should meet all their requirements, and I have a co-signer ready to go. The catch is that while I have a permanent contract, I’ve only been with my current employer for about five months. Is there a chance they might turn down my application because of that tenure?

I was digging through the Federal Reserve website, but I couldn't find anything regarding how long you actually need to be employed to qualify. Has anyone here dealt with this before? I'd love to hear about your experience if you have any insight!

So I've got a few things on my mind regarding getting an auto loan.

Basically, I just started working and in the near future (read: about a year from now) I’m looking to pick up a car. I'm at this pretty decent-sized company—won't name names—but the CEO is actually a great guy and super chill to work with. He mentioned he'd be down to let me buy a car through the company to save on taxes... so I'm wondering how that actually works in practice... like, would I have to pay the full sticker price upfront and then get a tax refund later, or does the price just drop automatically because of the tax savings right out of the gate?

As for the loan itself, I've been picking the brains of some coworkers about creditworthiness, but I'm getting mixed signals and honestly can't tell who's right...

Is it true that my monthly payment can't be more than one-third of my paycheck...

or is it more that after I pay the installment, I need to have at least $533 of my salary left over...

thanks in advance for the help!

Just a heads-up: if you go that route, the car stays on the company's books, and if things go south, you could end up losing it entirely.
In situations like this, an operating lease is usually the smarter move.

Look, there's already a massive megathread dedicated entirely to creditworthiness, so please, for the love of everything, go check that out first... we also have a specific thread just for auto loans => I'm merging this one now.

Steven White said:So I've got a few things on my mind regarding getting an auto loan.

Basically, I just started working and in the near future (read: about a year from now) I’m looking to pick up a car. I'm at this pretty decent-sized company—won't name names—but the CEO is actually a great guy and super chill to work with. He mentioned he'd be down to let me buy a car through the company to save on taxes... so I'm wondering how that actually works in practice... like, would I have to pay the full sticker price upfront and then get a tax refund later, or does the price just drop automatically because of the tax savings right out of the gate?

As for the loan itself, I've been picking the brains of some coworkers about creditworthiness, but I'm getting mixed signals and honestly can't tell who's right...

Is it true that my monthly payment can't be more than one-third of my paycheck...

or is it more that after I pay the installment, I need to have at least $533 of my salary left over...

thanks in advance for the help!

Regarding buying the car through the company—honestly, that sounds like a bad move. I don't know how well you know your boss or how long you've been there, but since the car stays in the company's name while you're the one paying for it, it doesn't seem smart to me. You could end up paying for the car AND the sales tax, and walk away with nothing at the end of the day🙂, though obviously, it might work out differently.
As for creditworthiness, your monthly payment shouldn't be more than 1/3 of your salary. So, if you make, say, $2000, your payment can't exceed $667. If that's not enough, you can bring in a co-signer to boost your eligibility, meaningthe monthly payment can't exceed 1/3 of your combined incomes. The co-signer also needs to meet a minimum income requirement, I believe, maybe $767. One of you will need a permanent contract; if you don't have one as the primary borrower, the co-signer must, but then you'll need to have been at the same job for 12 consecutive months.
That was the deal when I took out my auto loan. Just go talk to your own bank; they can give you the rundown in five minutes, but that's the general idea. The part about creditworthiness is pretty much the same regardless of which bank you use.
I'd recommend JP Morgan Chase.

Can my co-signer be someone from my family, like maybe my dad...

Sure can.

Steven White said:Can my co-signer be someone from my family, like maybe my dad...

Sure, as long as his credit score holds up and meets those requirements I mentioned earlier.

Hey there.

I'm thinking about picking up a car from a buddy... He's offering it for $3,000...
It’s an old Suzuki Swift from back in '90...
Some people might say, "stay away from loans for a piece of junk," but they're wrong.

My current ride is a piece of junk, but this one is a different story... (besides, the decision is already made, so.......)

Anyway...
I stopped by JP Morgan Chase on Friday (where I have my checking account) to see if I could get approved for a loan...
$20k isn't exactly a massive amount of money, and since I've been working for a private firm for over a year now—plus $1500 just renewed my permanent contract—I figured those bastards would have to approve me...
I've never even carried a balance or hit an overdraft (which I don't even have 🙂 )...

...But of course...
They completely blew me off. No luck at all. Not even with a co-signer. 😕

Are there any other options out there? Like, should I try a different bank that might actually approve a loan...?

That Swift from the '90s? It isn’t worth $3,000. Honestly, maybe half that much at most. Even if he’d buffed it out, polished it, and slapped on those obnoxious fake xenon headlights that everyone absolutely hates...
And your buddy? He’s a total disaster.

You aren't getting a loan from JP Morgan Chase with a situation like yours. They’ve practically frozen lending altogether, and when they actually do issue credit, the applicants have to be nothing short of perfect...

If your company is performing solidly and you don't have other debts—or even if you do—you might be able to scrape together $3,000...

Richard Wright said:That Swift from the '90s? It isn’t worth $3,000. Honestly, maybe half that much at most. Even if he’d buffed it out, polished it, and slapped on those obnoxious fake xenon headlights that everyone absolutely hates...
And your buddy? He’s a total disaster.

You aren't getting a loan from JP Morgan Chase with a situation like yours. They’ve practically frozen lending altogether, and when they actually do issue credit, the applicants have to be nothing short of perfect...

If your company is performing solidly and you don't have other debts—or even if you do—you might be able to scrape together $3,000...

Yeah...
Like I said, the decision's made... Once I get the cash (if I get it), it's a mad dash for the car!
I'm not going to waste breath arguing this because I could write an entire essay on it...

All things considered, it makes more sense to drive his car exactly as it is (which is junk) or sink another $1,500 into my own Swift, knowing it still won't come close to being as good as this one...

Richard Wright said:That Swift from the '90s? It isn’t worth $3,000. Honestly, maybe half that much at most. Even if he’d buffed it out, polished it, and slapped on those obnoxious fake xenon headlights that everyone absolutely hates...
And your buddy? He’s a total disaster.

You aren't getting a loan from JP Morgan Chase with a situation like yours. They’ve practically frozen lending altogether, and when they actually do issue credit, the applicants have to be nothing short of perfect...

If your company is performing solidly and you don't have other debts—or even if you do—you might be able to scrape together $3,000...

The business is doing fine...
And the monthly revenue is actually great!

You think getting a loan is just that easy...?
That's what I thought until I walked into "my" bank and they shut me down instantly...

And from what I can see, if I want a loan from other banks, I need to have been using a debit card there for 3 to 6 months or already be a customer using their other services...

There’s supposed to be a thread somewhere about auto loans, but I honestly can't seem to find 🙄

Kimberly Nguyen said:There’s supposed to be a thread somewhere about auto loans, but I honestly can't seem to find 🙄

Actually, yeah... 🙂

...Besides, given that it's a used car and the amount I need, it isn't even strictly an auto loan, just a standard personal loan...

David Sanders9
Honestly, just go hit up a different bank or maybe look into a personal loan instead. My home branch basically laughed me out of the building, but when I went to this other place, they practically rolled out the red carpet—approved my loan before I could even finish my sentence. It really just comes down to which bank you're dealing with...🤷 I’ve never even had an account or a card with them before.

Is this actually a reckless move, considering we’re all being told to tighten our belts while interest rates are hitting the roof?

I’ve been hunting for a car for months now, but I keep putting it off... Finally, I found something that actually checks all my boxes, both in terms of features and price.

Unless I hit the jackpot, buying a car in cash just isn't happening. My only real options are a loan or leasing. I'm young, I don't have any other debt hanging over me, and the monthly payment would only be about one-fifth of my paycheck. No kids, and my housing situation is already sorted out.

So, should I take out the loan or pass?

The Federal Reserve keeps raising rates, and even though JPMorgan Chase was looking to hike theirs, I noticed on the Ford website that they're offering a fixed-rate loan through JPMorgan Chase at 8%. 🤷

Brian Robinson8 said:I’ve been hunting for a car for months now, but I keep putting it off... Finally, I found something that actually checks all my boxes, both in terms of features and price.

Unless I hit the jackpot, buying a car in cash just isn't happening. My only real options are a loan or leasing. I'm young, I don't have any other debt hanging over me, and the monthly payment would only be about one-fifth of my paycheck. No kids, and my housing situation is already sorted out.

So, should I take out the loan or pass?

The Federal Reserve keeps raising rates, and even though JPMorgan Chase was looking to hike theirs, I noticed on the Ford website that they're offering a fixed-rate loan through JPMorgan Chase at 8%. 🤷

Of course you can take the loan. Generally speaking, leasing is a worse deal for individuals than a standard auto loan. All this talk about "tightening belts" is mostly just noise meant to spook people—don't let it get to you. In fact, it might actually be smarter to aim for a payment closer to 1/3 of your paycheck rather than 1/5, just so you can shorten the term. With interest rates being as volatile as they are right now, reducing your exposure to time is key.
That Ford offer seems decent, but check which specific models qualify, because the deals aren't universal. Link Also, shop around other manufacturers; they’re clearing out older inventory at significant discounts, like this Mazda for instance.

Brian Robinson8 said:Is this actually a reckless move, considering we’re all being told to tighten our belts while interest rates are hitting the roof?

Not at all. Buy. Look, if you need the position, go for it, but I’m personally holding out for even better plays. For instance, look at Focus Financial Partners—they hit the market with an "unbeatable deal" late last year, $32 and now they're already sitting at $30...

I honestly think we’ve reached the point where taking out loans just isn't worth the headache anymore. And I don't just mean because everything feels like it's spiraling—though, let's be real, it is—but also because of the looming threat of interest rate hikes and those looming energy price spikes hitting businesses... it's a mess.
If you aren't in an absolute bind, my advice would be to stick to public transit for a little while longer, or maybe pick up a beat-up used car for maybe $2,500 or $3,000 and just rattle around in it until things stabilize a bit better... 🤷