# BMWFS Credit Approval Factors



## the J-Man (Jul 31, 2009)

I've yet to see this discussed in detail by somebody in the know. What are all of the factors that go into receiving an automatic approval from BMWFS? I know that many factors are programmed into a computer that generates the auto approvals, but what are the constraints?

Credit Score? What's the magic number? What score is used? A strict FICO or one of the hybrid scores out there? I've heard that BMW uses Transunion credit reports, is this always true?

Income: Is there some sort of car payment to income ratio that BMWFS uses? What is the percent? How is income usually verified? Tax returns, paystubs, employer inquiry/call, or not at all? 

Other debt: Do they consider other debt on your credit report? I would assume they take your other monthly payments + new car payment amount and divide that by your income? What is max allowable % for auto approval?

Down Payment/Cap Cost Payments: Is this factor looked at independently, or would any down payment money simply figure in to the debt/income ratios described above?

Regional differences: Do the approval factors vary by state/region, or is everything fixed for the US?

Time at current employer, time at current residence, other facts, etc. Are these or any other factors taken into consideration?

I understand that each situation is independent, and there might not be any fixed formulas, just trying to get a baseline here.

Which of these scenarios would likely be auto-approved?

1.) $100K income, $60K car, $10k down, $50K loan, $1000/mo mortgage debt, no other debt, 780 credit score.

2.) $200K income, $60K car, $10k down, $50K loan, $1000/mo mortgage debt, no other debt, 680 credit score.

3.) $75K income, $50K car, $10K down, $40K loan, $1500/mo mortgage debt, $500/month other debt, 800 credit score.


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## bmwKbiker (Nov 5, 2006)

the J-Man said:


> I understand that each situation is independent, and there might not be any fixed formulas, just trying to get a baseline here.


Care for some Jumbo shrimp?

You cite a lot of variables, I'll give you a different viewpoint as the lender BMWFS only needs one good reason not to approve the loan.


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## BMWofBloomfield (Nov 7, 2008)

There are no published specifics but, here a some general things:

HUGE emphasis on comparable borrowing history. For example, previous credit shows a $20K AHFC loan and new application is for a $60K cap cost vehicle. This would not be comparable in the eyes of BMW FS. 

The longer the time with established good credit the better.

They look at derogatory things that happened some time ago similar to the way other banks would look at them if they happened more recently.

The banks equity position isn't as important as your credit history. 30% down towards an 7-Series would seem like its an automatic approval but, it's not if credit was/is an issue (and/or if you didn't have a sizeable car loan/lease before).

Having low balances on high credit limits is what they would like to see.


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## mawana (Nov 15, 2006)

^^^^^^^ heed the word!

However, you worry too much - just lodge the application and let them decide. Your scenarios are generally acceptable! Maybe (except) #2 makes you a relatively 'high' risk client but you obviously can afford it. #3 suggests you would be over-extending yourself!


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## FLA 335 (Sep 4, 2009)

i had no previous loans (either auto, school, credit, etc.) i was declined by the automated system, however i was asked to put a bit more down and they would see that i was no longer a risk. i believe it is a combination of outstanding debt, loan history, credit score, housing situation, current salary (with proof of income... DONT LIE), down payment, financing rate, etc. let me know if i missed something.

i have 0 loan history, 0 oustanding debt, 778-782 credit avg from all 3, no rent or mortgage, above average salary, 15-20% down, 0.9% rate... dont know if that helps...


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## shpuntik (Dec 4, 2006)

From a lending perspective (I am a mortgage loan officer) here is what we look at... I would presume that a lending authority such as BMWFS is probably somewhat aligned to the same variables.

1. Credit Score:


740+ is ideal and preffered.
720-739 is still good but a brief review of your credit history is done.
700-719 is OK but a cursory review of your credit history is done.
640-700 you are getting the worst rates, it will cost you a lot, and a very strict review of your credit history is performed.

2. Debt to Income Ratio (DTI):

_This is determined by adding total monthly debt and deviding by total monthly GROSS income._


33-39% is ideal.
40-44% is good
45%-49% is still OK
50% or more and you have some explaining to do. I should mention that you still might get a loan even with a 60% DTI but you must have excellent compensating factors (assets, credit score, big downpayment, etc.)

3. Loan to Value ratio (LTV):

This is fairly simple... The lower, the better. 20% down is acceptable, 25% is good too, 30% is preffered, 35% or more and your in really good shape to get a loan (all things bieng equal ofcourse).​
4. Credit History:


At least 3 open tradelines (credit accounts).
The less derogitory items the better (30/60/90 day lates, charge offs, etc).
If you were bankrupt, 7 years has to pass by before they even consider you.

Hope this helps! :thumbup:


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## chasz17 (May 4, 2007)

Shpuntik:
Car lending is not anywhere near as strict as you are making it out to be. Mortgages are a completely different animal and the commercial lending institutions are much more careful on home loans now.
1) 680 and above on an AUTO FICO is a good point to start
2) DTI should be less than 40%.
3) LTV should never exceed 110% of a recognized retail value
4) Previous good auto experience is worth it weight in a great approval. A rule of thumb is at least 4 to 5 years on the bureau.

Again, these are car lending guidelines


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## shpuntik (Dec 4, 2006)

chasz17 said:


> Shpuntik:
> Car lending is not anywhere near as strict as you are making it out to be. Mortgages are a completely different animal and the commercial lending institutions are much more careful on home loans now.
> 1) 680 and above on an AUTO FICO is a good point to start
> 2) DTI should be less than 40%.
> ...


Definitely agree, that is why I said _"From a lending perspective (I am a mortgage loan officer) here is what we look at... I would presume that a lending authority such as BMWFS is probably somewhat aligned to the same variables."_

The OP's question was more aligned towards what variables BMWFS will look at. I simply gave a breakdown of what *we* look at and how we weigh the risk.


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## chasz17 (May 4, 2007)

Point taken.


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## bmwKbiker (Nov 5, 2006)

The down payment plays a big role (lowers the LTV) if you show risk elsewhere.

Cars (and even houses these days) can depreciate pretty rapidly, no lender wants to be in the position of reposessing a vehicle that is worth significantly less than the loan balance. If your credit is very strong you can get away with a low or no DP. BMWFS financed 100% of my purchase price, the CA even asked if I wanted to finance TT&L also, but that is a reflection of a low risk profile. If you have a high risk profile any lender is going to be adverse to lending the full retail value of the collaterall.


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