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Can't get approved for a loan.. suggestions?

Can't get approved for a loan.. suggestions?

So my tesla is ready for pick up, but I just got a call saying that I can't get approved and I would need a co signer. I am a year out of college working as a software developer making 80K living at my parents still so I have no expenses so a tesla is the perfect toy to buy, especially since I have so many ideas for apps to make!

Anyway my credit score is good, but the banks say my credit history isn't long enough. And I bought my current car for 20K cash a few years ago, which I now regret for my credit. Basically they said that the only way I could get this car is if I came up with enough cash to buy it, however that would not help my credit at all and that is one of the reasons I want to get this car. Would anyone have any suggestions what I can do? A co signer is out of the question since I make more than anyone else in my family...

Any advice would be nice! thanks!

alexeb112 | 15 février 2013

I have I even offered to put a 50% down payment on the car. :(

GeekEV | 15 février 2013

If you CAN pay cash, you could use the cash to get one of those secured credit cards and put the car on that. But I think you need to consult a financial planner. I'm not sure a Tesla is the best way for someone in your position to be spending his money... I'd start with moving out of your parents and build your credit with a rental history.

prash.saka | 15 février 2013

Try other banks or credit unions. If your parents are in USAA or some other similar organizations, that can help. You might have to pay a higher interest rate but it should be possible. Also, you can try www.lendingtree.com where you can apply for loans at multiple banks at the same time.

Full disclosure: Based on what I know, neither I nor any of my friends/family members have any connection to Lending Tree or any of its affiliates. (Dang, is that disclosure necessary?)

Good luck.

archibaldcrane | 15 février 2013

Who did you try to get financing with?

alexeb112 | 15 février 2013

Geek, does renting actually help your credit?

I have tried bank of america and Wellsfargo.

Prash thanks I'll give that a shot!

Does anyone know if I can't get a loan if there is anyway to get my 5k back? I guess I'll ask Tesla that question as well.

STARR X | 15 février 2013

If you had not tried PenFed, they are the easiest.

Carefree | 15 février 2013

Not trying to be mean but why would you go through the entire ordering and build process without having your financing secured? That would be the first thing I'd do before even putting down the 5K deposit. It's a little late now - isn't it?

GoTeslaChicago | 15 février 2013

Alex,

I'm really surprised you can't get a loan with 50% down. With that much down, the risk to the lender is very minimal.

Have you tried to go higher up to someone who has the power to override a computer generated approval/denial process?

CC | 15 février 2013

Like StarrX said, try www.penfed.org or try your local credit unions as well. Some of the big banks like BOA and Wells tend to be very picky.

kjo | 15 février 2013

@alexeb112- the paperwork for the car order specifically states that the order is not contingent upon financing , and that your deposit will be kept as liquidated damages. However, they can still enforce the contract unless they agree in writing not to. So best bet is to call them! I doubt you'll get your 5k back but you can hope they won't enforce specific performance on the contract.

@carefree- he would have had to get pre approved when he put down the deposit ( like 6 months ago??), and those pre approvals aren't binding on the lender because they're only good for a specified period of time, so he can't be the only one in this situation!!

Good luck alexeb112

lov2krz | 15 février 2013

I think if you got your parents to co-sign that would be all you need, regardless of how much they make. The lender justs wants the loan secured. Ask your parents.

L8MDL | 15 février 2013

I agree with asking your parents. Lenders are looking for a good payment record first, then they look at how the loan will be paid off.

jat | 15 février 2013

So how did your car get finished without the financing arranged? Had they initially approved it and then backed out?

GeekEV | 15 février 2013

@alexeb112 - While renting isn't credit, per say, your address renting/owning history definitely factors into your credit report. It shows you are responsible about monthly payment obligations.

TINO F | 15 février 2013

Try Wells Fargo and search college grad loans

portia | 15 février 2013

credit unions are easier to get loans than big name banks.

cmarkortiz | 15 février 2013

scared i will have the same situation happen to me. what is this penfed all about? any updates to your story ?

Brian H | 16 février 2013

Pentagon Federal Credit Union. Requires some ass'n to the military, or a donation to a selected list of charities ($15+?). Loans to 70% of sticker, at 1.49% for perfect credit scores, higher for lower scores. Etc.

Brian H | 16 février 2013

P.S. I forget whether it's 5 or 7-yr terms. Check online. Some have started and processed loans online with them in less than a day. It's getting very used to Model S, and likes the business, and much of it comes from the forums 'spreading the word'.

alexeb112 | 16 février 2013

@GoTeslaChicago Yeah that is what I though, but so far I have only gone though the tesla reps and they said they couldn't get me a loan even with 50% down. So in the morning I will go to some banks and ask in person. I remain doubtful though...

@lov2krz when I talked to the tesla financing office they said that the co-signer had to be someone that could basically get the loan on their own, and neither of my parents would be good enough..

@cmarkortiz that would suck! I am going to go to some banks in the morning and actually talk to people, I find it hard to believe that a bank still wouldn't lend to me even when I offered to put 40k as the down payment. But that was Wells Fargo over the phone so maybe I will get a different result in person.
It looks like PenFord is a credit union that is for people affiliated with the army or something, but if you donate 15 bucks you can become part of it and get a max of 70k loan with 10% down or something like that.

Brian H | 16 février 2013

Yeah, PenFed would suit you perfectly, if you can get it. And you're right: $70K, not 70%.

ak-tually55 | 16 février 2013

Try Alliant Credit Union. No matter where you live, you can become a member through a national non-profit organization by signing up for its membership (minimum donation - few dollars). If there is no derogatory information in your credit history, they should be able to do a loan for you.

Take care.

GoTeslaChicago | 16 février 2013

Alex,

What state are you in? I have a call out to my loan officer at Alliant to ask him whether he thinks they can finance someone in your situation. I'll report back anything I learn.

mlaiken | 16 février 2013

Penfed I found to be very right so I wouldn't try them. I went to logix credit union and the process too 5 minutes. I had previously been denied by penfed and logix approved me right over the phone. Try them and the rate is the same as penfed. 1.5%.

mlaiken | 16 février 2013

In last post I meant penfed is very tight. No right. Gotta love spell check.

bottesini | 16 février 2013

So you want advice? Here's some that I suspect you really don't want to hear but what the hell . . .

First of all I think the bank is doing you a favor. (Boo, throw the bum out!!!) You're making 80K a year working as a software developer and living with your parents? Not a very healthy situation to begin with. If you were living on your own, & we have to wonder why you're not, you'd quickly realize that your 80K salary is not a hell of a lot - especially if you lust for the kind of life that a 60-90K car fits into. Despite what you've read about the car both here & elsewhere you've no idea of what it's going to cost to own it. I'm not referring to car-related stuff like insurance (sill under 25? Watch out!) or down time (it will happen). Little aggravations like - you've picked up a hot date & pick her up with the Tesla (!). Oh! she thinks, this is going to be a memorable evening! She's expecting to be impressed. So you go to a fancy-ass eating establishment with the wine steward, valet, etc. etc. And after a nice romantic meal the check arrives & the amount equals roughly what your car payment is for the month. All you had been thinking about was a simple meal followed by what we're all after. So what now? You take her to your parents place? But she's expecting a condo overlooking the Mediterranean & thinks: he still lives with his parents? Suddenly the 80K (before taxes) is starting to look like poverty wages.

OK, I'm full of it, you're still determined to get the MS. Here's what you can do: Save up the money & pay cash for it. Advantages: You don't have to deal with the bank (& you can stop in & offer the putz who declined your loan a ride in the car). You don't have to make monthly payments which will cause the final price of the car to go up ???% (oh, & what if the company tanks while you're still making the payments? We on this forum don't even want to imagine that possibility because we can all afford to take the loss - aren't we guys!) You appreciate car more & you'll treat it even better because you busted your ass saving for it. Since it's surely going to take some time (coupla years, probably more) you'll know how the company is doing. Maybe it's got a newer model available, maybe a better battery, maybe the cost has come down, maybe they're still in business! Maybe your parents have come to their senses & thrown you out of the house.

Hey Alex(?) if you play your cards right it's a long life. Maybe it'll take some time, but you might learn that if you can't get all the stuff that you lust for at the beginning, getting it a little - or even a lot - later often brings joy that you can't even imagine at this stage of the journey.

danielccc | 16 février 2013

Alex, you don't say which model you ordered. If an expensive one, consider downgrading. I suspect if you go high enough up the chain, Tesla will accommodate you though in theory they don't have to. A lower loan amount might be easier to get.

Lou in SoCal | 16 février 2013

Just general advice for others, you can get a pre-approval before you finalize your configuration. You have a full 4 weeks from when you get the configuration email and when you have to finalize. At this point, if you can't get financing, you can still get your $5k back.

@Alex, my advice to you is to speak to an loan officer at various banks and how much financing you can get, if at all. For example, if they say you can only get $30k or $20k, then you can find other ways to get cash (i.e. credit cards, personal loans, etc.).

TheAustin | 16 février 2013

I actualy had the opposite experience with my financing...I specifically went to a local credit union because I wanted to give a local business my business...But was denied (I think mostly due to the "exotic" nature of the car). All of a sudden, I was in a total panic...I applied to Bank of America and Wells Fargo, and was approved by both in minutes. Not sure that this is any help to you, but I'm just sharing it because it's so different than the other people's experiences mentioned here.

ylyubarsky | 16 février 2013

Alex! I am in the same shoes as you. So don't listen to BS advice from bottesini. Try everywhere you can and you'll get it one way or another. And bottesini stories about your date and an apartment overlooking Mediterranean Sea.... Don't listen to people like this. Live your life and enjoy it because if you don't buy this car you'll regret it in the future. God forbid something goes wrong, your parents will always cover your ass. So go ahead and try.

cmarkortiz | 16 février 2013

Brian H penfed seems like a good credit union. I dont have affiliation so I would have to make donation. Since Im looking for basically around december of this year to start process do you think thats enough time in a credit union to qualify for loan. Should I open checking and savings? Never had a credit union account before so unsure how they work.

gocken1 | 16 février 2013

I had the same problem for my first car. The credit union would not give me a loan even with 50% down. The person you talk to at the bank/credit union will most likely not have the authority to make a decision to approve your loan. You will have to raise it up to their boss to get approved. Don't just accept a no from the first person you talk to.

Carefree | 16 février 2013

I think it is pretty poor advice to say "your parents will always cover your ass" - I know that mine could not have done so when I was in my 20s. Live within your means is still the best advice to give to anybody.

Brian H | 16 février 2013

cmarkoritz;
December 2013? I don't think any S is scheduled that far out in the US. Are you overseas? Is this an X? When is it due? Penfed will have more TM experience by then, but the X will be new to everyone.

Open a (required) small savings account and start asking questions of them.

cmarkortiz | 17 février 2013

Brian H Im in Arizona but im estimating I would have enough money for a decent downpayment until December of this year, so hoping they would still be taking orders around that time if not not sure when the cycle of orders begin again?

Brian H | 17 février 2013

There is no cycle. Reservations can be placed anytime, including Sundays.

eltonf | 17 février 2013

I can't seem to wrap my head around why any person would live with their parents and buy a $50,000+ car. The two just don't go together.

tork | 17 février 2013

Why are you knocking him for living with his parents? Living with his parents results in lower expenses which increases his ability to make his car payments.

eltonf | 17 février 2013

@tork it's just different personal values I guess. To each his / her own.

ir | 17 février 2013

I'm no Suze Orman but a roughly 1:1 gross income to car ratio raises red flags with me regardless of personal situation. When you say your parents don't qualify to co-sign, did the banks tell you that or you didn't bother trying? In the latter case, if they are willing, you should give it a go. In the former, you need to think why:

- If they refuse because they feel its a bad idea, maybe you should heed their warning
- If they don't make enough money, are they willing to put theilr life savings / home up for collateral?
- ylyubarsky: he already said his parents don't make enough, how do you expect they bail him out?
- If the car costs as much or more than the roof over your head, it's time to seriously think about this

How are your savings? If you're in software, is your 401k & ESPP maxed out yet? Both are free money opportunities (emp. match, purchase discounts) that you'd do better leveraging than sinking your paycheck into a big car loan. After maxing them out, do you have enough monthly income to still pay for the Tesla?

Have you priced out the Total Cost of Ownership? It would suck if after financing the car you can't afford the insurance so you can't drive it! What about rewiring the garage? Service plan? Extra snow tires (if necessary)? Taxes (in CA, sales tax adds up to an extra $10,000)?

How are your personal savings? Are you raiding your emergency funds for your $40k down payment? If your parents' roof caves in, can you pitch in? Would you move out and abandon them? Major emergency renno. often costs as much as a Tesla.

Since you are living with your parents, are you pitching in? Do they have debts that you should be helping with? As long as you are under their roof, eating their food and fueling your car with their electricity (you most likely paid for your own gas before) you are a single family unit. Can your family finances absorb the hit? Are you pulling your weight?

Is your Tesla going to make money for you? You already have a car to get you to work. Otherwise, the Tesla is really is a luxury money sink. A net loss that has been factored into our lives. Would it make better sense investing your $40k down payment and having a net gain?

If after lots of soul searching and considering the above (including talking your parents into this) and you still want to go through with it then I wish you good luck and happy trails. Otherwise, consider it a $5000 life lesson.

BTW... as co-signers, your parents would co-own your car. They better be getting good dibs on it!

Captain_Zap | 17 février 2013

A $5000 lesson might be cheaper than paying the high interest rates offered to those that don't qualify for market rate loans.

Usually credit unions are more conservative when it comes to loan qualification because they want to have lower risk portfolios. A low loan failure rate serves their member's primary objective, having access to the lowest interest rates possible.

cmarkortiz | 18 février 2013

alexeb112 .... any updates to your story yet??

cmarkortiz | 20 février 2013

any?? lol

DigitalSavant | 21 février 2013

@tork: knocking him because he's an adult, making $80k, living at home while his parents pay all the bills, mortgage, groceries, etc. Instead of helping with those expenses, he's using that money to buy an expensive luxury car. So his parents are essentially paying for the car.

Yeah.. nothing wrong with that at all.

@alex: you haven't really earned the car until you have two feet to stand on in this world and are able to pay for it despite all the hassles and expenses life has to throw at you.

Just my 2 cents. Put that toward your loan. And good luck with it all!

jat | 21 février 2013

Or just change it to a 40kWh car, and you will have plenty of time to save up money :)

danielccc | 21 février 2013

+1 @jat

That's the least he should do. Get down to a 40, a red 40 if possible. Also 19" wheels if he ordered the 21", clean out other options he might have gotten. More time, less money.

Tesla should oblige, as the alternative is a lost sale.

CC | 21 février 2013

@cmarkortiz

I got my loan through PenFed.

You probably don't need to start now, you can apply for the loan when you are invited to configure your car for production. If you are approved, you car loan is good for 90 days (3 months), which should be enough time for Tesla to build your car late this year, I hope :)

The process was pretty simple and the instructions on their site is good. Once you click on the car loan, they will ask you to become a member. 2 steps: 1. Donate $15 to $25 to one of the two listed non-profit veteran's support organization. 2. They will open a PenFed account for you with a $5 deposit. After, you can apply for your loan.

If approved, they will send you a blank loan check good for 90 days. When Tesla ask for final payment, you just fill out the check, and either present it to your delivery specialist or mail it to Tesla.

hfcolvin | 21 février 2013

The bank wouldn't approve your loan for a reason. You need to prove you can live within your means and you haven't yet. I applaud your desire to want to own and drive this car, but for now, buy a Leaf, save your money, live a little and have something to look forward to.

In the meanwhile, maybe you can sell your reservation to someone and make a little money on it.

Carefree | 21 février 2013

Not sure people here realize this: The OP clearly states that his car is ready for pick-up! If he cannot get financing I wonder what would happen to his car - I guess Tesla would try to find another reservation holder with the exact same configuration. What a mess.

GoTeslaChicago | 21 février 2013

Alex,

Talked to my loan officer at Alliant. His comments were pretty guarded, as they should be, but he said they are doing a lot of Tesla loans, and that with 50% down, and a good credit score, even with a short record, you should have a shot at it.

No promises, but give him a call:

Scott Paulson
spaulson@alliantcreditunion.com

773-462-2086

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