This is so frustrating-- financing!! - Sportbike Forum: Sportbike Motorcycle Forums
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post #1 of 26 (permalink) Old 06-20-2001, 10:56 AM Thread Starter
 
Join Date: May 2001
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Thumbs down This is so frustrating-- financing!!

Hey guys.

So, I'm in the process of buying a F4i, and tried to get the financing taken care of yesterday (for those who saw my last post, I decided that I couldn't setttle for anything besides the honda). I applied for the Honda Card, and was shut down big time. Ugh.

They said that I have limited credit, but I was approved for my 23k car loan only six months ago. I don't understand why I would be denied a measly 8k line of credit.

Here's what I think may be the problems, and you guys tell me what you think:

1. My buddy tells me that banks will look at your entire financial situation, determine how much total credit you deserve, then issue your credit line based on that number, minus any credit you may already have outstanding. So, If the bank determines that I am good for 25k, I'd be screwed because I already blew 23k on my VW. Could this be the case? If I sell my car and pay off my auto loan, do you think I'd be more likely to be approved?

2. Are credit card-type loans harder to get approved for than regular auto loans? I think this may be the case-- anyone know for sure?

3. I make more than most people my age, but like any collgege kid, I have been late on a credit card or utility payment here and there, but nothing unreasonable. I know these late payments have a negative effect, but how damaging are they?

Y'all are going to be mighty happy when I finally get this thing, cause then I'll stop cluttering SBW with posts. In the meantime, thanks for all the help so far-- Carvin, Pete, Chris_y2k_r1 especially.
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post #2 of 26 (permalink) Old 06-20-2001, 10:57 AM Thread Starter
 
Join Date: May 2001
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btw, finding a co-signer isn't an option, unfortunately. I tried.

Also, I AM selling my car. It's on autotrader.com already and I'm not buying the bike until I have resolved the car loan. I wanted to get the bike financing taken care of beforehand in case I encountered any problems. Looks like i did.

Last edited by ryannapoleon; 06-20-2001 at 11:03 AM.
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post #3 of 26 (permalink) Old 06-20-2001, 11:22 AM
Pete
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Ryan, absolutely YES, your outstanding debt (i.e., your 23K car loan, plus any other debt you may have, like credit cards) has A LOT to do with how much more credit you can get. If I asked you for a loan of $1200 to be paid back over 12 months at $100 per month, and you knew I had no other debt, made $75 per month, and could just scrape by on the leftover $25, would you loan me another $500? I think not.

First, do your own calculation to see *if* you can afford the $8000. What's your monthly take-home pay, minus all of your debts, rents. etc. What's leftover? Enough for the bike payment plus enough to feed yourself and the chicks the bike is gonna get for you? If you feel like you can afford it, then go to a bank, or better yet, your company's credit union if they have one, to apply for financing. I'd venture to guess that at your stage, an unsecured simple interest personal loan is out of the question. And no, unless a credit card company had to put a collection agency on your ass for past-due payments, paying late usually doesn't tarnish your credit history.

Most importantly, don't let your lust for a new bike cause your hand to write checks your ass can't cash. And don't get suckered in to things like the "Honda Card." By the time you finish paying that $8000 off, it will have been more like $15,000. Getting up to your eyeballs in debt is not a smart thing. Without knowing, or wanting to know, your complete financial situation, I'll go out on a limb and say that if I were in your shoes, I'd either buy a much cheaper used bike, or, replace your $23K car with a $10K (or cheaper) car and then go get the $8K bike.
 
post #4 of 26 (permalink) Old 06-20-2001, 11:25 AM
Pete
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Quote:
Originally posted by ryannapoleon
Also, I AM selling my car. It's on autotrader.com already and I'm not buying the bike until I have resolved the car loan. I wanted to get the bike financing taken care of beforehand in case I encountered any problems. Looks like i did.
A-ha, you added that while I was typing my response (which took me forever as I was being constantly interrupted by employees).

Smart move on holding off on the bike until the car is gone. Good luck with it Ryan.
post #5 of 26 (permalink) Old 06-20-2001, 11:33 AM Thread Starter
 
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Pete-- good advice.

Here's my plan: Right now, I spend $450 for my car payment, and $300 for insurance every month. I realize the Honda card and other like it is a total rip-off (my current auto loan is at 8% as opposed to the card's 17%), but by putting in on a card rather than financing through an actual bank, I can avoid having to pay full coverage insurance. My bike payment on the card would be roughly $150, and insurance would be $50 more. That's $550 less debt per month that I will have to worry about. That extra cash will go to paying off the bike as quickly as possible; I want to buy another car in the spring and I don't want bike payments in addition.

So, the Honda Card really isn't a bad deal for me, considering I will be paying it off rather quickly. And like I said, I won't have any car payments at all after I sell it. I can definitely afford the bike-- it's just hard convincing the bank that I can.
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post #6 of 26 (permalink) Old 06-20-2001, 11:49 AM
 
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Do you have much equity in the car? If you just got it six months ago I guess, probably not. If you can sell it for enough to pay off the car loan and have some left over, a nice down payment will always help to grease the financing wheels.
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post #7 of 26 (permalink) Old 06-20-2001, 02:17 PM
 
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That's a hell of an insurance bill, Ryan.
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post #8 of 26 (permalink) Old 06-20-2001, 03:56 PM
 
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Pete, I agree with all you told R with one significant exception. Being reported past due 30+ days on any credit line reported will most certainly have an effect on R's (or anyone's) credit score, which will have the effect of limiting or eliminating financing options. Credit scores are even being used to price and sellect homeowners insurance. This is a big deal. I volunteer for my state, teaching a class for first time home buyers. I tell them that creditors want your credit report to look like your driving record. If you keep running off the road (late pmts. collected acts.) they are not going to get in the car (bike) with you for fear of being injured. Show them you can drive. By the way, is it irony that I laid my bike down two weeks ago? Good luck guys.
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post #9 of 26 (permalink) Old 06-20-2001, 04:13 PM
 
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The other thing you gotta look at is that bikes are consider "luxury items" or "toys" and so lenders will scrutinize your credit more...I would bet you could get out and get another car loan right now...but bikes aren't considered a necessity, so their harder to finance...the best option is a Credit Union you've been with for a while (like mine since birth). I've paid my payments every month for the last 10 years ontime.....so I usually get good rates on new loans and don't usually have a problem getting them approved within 24 hours....

Just remember you're buying toys...its bound to be harder to get them
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post #10 of 26 (permalink) Old 06-20-2001, 04:19 PM Thread Starter
 
Join Date: May 2001
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doubleaught-- Yeah, it is. Five speeding tickets. (Do i REALLY need a bike??)

To be completely honest, three of those tickets have dropped off my record and do not affect my rate. Come july 7, the others will be gone too! (two tickets in two different cities, four hours apart. sucked.)

Ugh-- I guess I'm going to sell my current car to pay off the loan and buy a beater car until I have enough cash to put down. That sucks. Oh well, now I can get the 2002 yellow/black cbr.

Thanks for your help, all-- very cool. And if anyone else has something to add, by all means, enlighten my broke ass.

ryan
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