Okay, allow me to elaborate. Please bear with me. This will be a long post.
My cousin has been looking for a vehicle for about 2 months. Since I have the most experience in buying cars that he knows, he came to me and asked what can be done. I did some research on different cars and I told him his best bet is to wait until he moves back to Texas before he buys a car (We live in Chicago, where he is originally from, but he moved to Texas 2 years ago. He came back to Chicago in March 2013 because of some difficulties in Texas but he has a good job now and wants to move back to texas in June of this year). He did not want to wait to move. I then told him he should just pay cash for a car. He didn't want to do that either. I then told him he should wait until tax time when he gets his return (which will be quite large) and use that as a down payment on a slightly newer but cheaper car. Like a Toyota corolla. He didnt want a small car nor did he want to spend more money taking the bus to work while he waited for his return. He wanted a car now. Plus he wasn't sure when his next off day will be so he wanted to take advantage while he could.
Most people probably would have given up on somebody like him, cousin or no cousin, but I wanted to help him the best I could. All he had to put down was $1500. Not a penny more. Used car lots were out the question so I took him to a Chevy dealership that I brought my car from. He even had the same salesman that sold me my car. I didnt know his credit situation at the time but since he didnt own CC's or had any previous car loans or any loans before I knew he more than likely had no credit.
After they ran his credit, sure enough he had no credit. He thought (as I did as well even though I had a feeling this wouldn't work) that he could afford a $13k car but he hasn't been at his $13.50 hr job that long. The salesman told him he had 3 options. 1. Get a cosigner. That option wouldn't work for him. 2. Put about 4 g's down. That option could work but he didnt want to wait. 3. Buy a car around 5000. This is the option he took.
To make this story a little shorter he picked a 03 Chevy trailblazer with 122000 miles on it. The truck is nice. Its a one owner, local trade so that's good I guess. He put his 1500 down. I wasn't sure about him buying this truck. He had other options but he didnt want to do any of them. He didnt want to leave because there wouldn't be enough time to look for another car. He got the extended warranty (2 years on the powertrain) and his monthly payments are $365 for 30 months. The truck costs $6100 before fees and taxes and the extended warranty was $1700. OTD I believe came out to $8300 or something like that.
The finance company he has is Blackhawk I believe. HIS INTEREST, as you noticed buy the title, IS 32.99%!!!! IS THAT NORMAL?! AND LEGAL?! I never heard of a new car dealership offering such a rate, especially with a down payment. Buy here pay here lots are more likely to do this but I never heard of a new car dealership charging an extreme rate. My interest rate, by comparison, is 13.7%. Yes, that is high also but I am thinking of refinancing in the future.
I didn't mean to make this post so long and I hope nobody is judgemental towards my cousin. I know what he did was silly but he will have the money to pay the thing off in about a month or two (hence why I told him he should wait). Plus now he has credit and if everything works out he can put this behind him.
So my questions are is 32.99% normal for somebody financing an old car with $1500 down with no credit? Has anybody else had a rate like this?
Thank you for taking the time to read this and any help is MUCH appreciated.
My cousin has been looking for a vehicle for about 2 months. Since I have the most experience in buying cars that he knows, he came to me and asked what can be done. I did some research on different cars and I told him his best bet is to wait until he moves back to Texas before he buys a car (We live in Chicago, where he is originally from, but he moved to Texas 2 years ago. He came back to Chicago in March 2013 because of some difficulties in Texas but he has a good job now and wants to move back to texas in June of this year). He did not want to wait to move. I then told him he should just pay cash for a car. He didn't want to do that either. I then told him he should wait until tax time when he gets his return (which will be quite large) and use that as a down payment on a slightly newer but cheaper car. Like a Toyota corolla. He didnt want a small car nor did he want to spend more money taking the bus to work while he waited for his return. He wanted a car now. Plus he wasn't sure when his next off day will be so he wanted to take advantage while he could.
Most people probably would have given up on somebody like him, cousin or no cousin, but I wanted to help him the best I could. All he had to put down was $1500. Not a penny more. Used car lots were out the question so I took him to a Chevy dealership that I brought my car from. He even had the same salesman that sold me my car. I didnt know his credit situation at the time but since he didnt own CC's or had any previous car loans or any loans before I knew he more than likely had no credit.
After they ran his credit, sure enough he had no credit. He thought (as I did as well even though I had a feeling this wouldn't work) that he could afford a $13k car but he hasn't been at his $13.50 hr job that long. The salesman told him he had 3 options. 1. Get a cosigner. That option wouldn't work for him. 2. Put about 4 g's down. That option could work but he didnt want to wait. 3. Buy a car around 5000. This is the option he took.
To make this story a little shorter he picked a 03 Chevy trailblazer with 122000 miles on it. The truck is nice. Its a one owner, local trade so that's good I guess. He put his 1500 down. I wasn't sure about him buying this truck. He had other options but he didnt want to do any of them. He didnt want to leave because there wouldn't be enough time to look for another car. He got the extended warranty (2 years on the powertrain) and his monthly payments are $365 for 30 months. The truck costs $6100 before fees and taxes and the extended warranty was $1700. OTD I believe came out to $8300 or something like that.
The finance company he has is Blackhawk I believe. HIS INTEREST, as you noticed buy the title, IS 32.99%!!!! IS THAT NORMAL?! AND LEGAL?! I never heard of a new car dealership offering such a rate, especially with a down payment. Buy here pay here lots are more likely to do this but I never heard of a new car dealership charging an extreme rate. My interest rate, by comparison, is 13.7%. Yes, that is high also but I am thinking of refinancing in the future.
I didn't mean to make this post so long and I hope nobody is judgemental towards my cousin. I know what he did was silly but he will have the money to pay the thing off in about a month or two (hence why I told him he should wait). Plus now he has credit and if everything works out he can put this behind him.
So my questions are is 32.99% normal for somebody financing an old car with $1500 down with no credit? Has anybody else had a rate like this?
Thank you for taking the time to read this and any help is MUCH appreciated.
Thank you so much for that info. The salesman actually told him that if his credit score was 500 or more they might be able to put him in that 13k car. A CC is definitely something he should get. He is 27 (I'm 29), so I think it might be better if he pays the car off when he gets his tax return and just use the CC to build his credit for the next 2 years. He has pretty high standards so he really wants a BMW but that is well out his reach right now. He has 2 jobs.
Oh and sorry about the double posts 
Reads to me like they saw him coming. Impatient, desperate, and willing to buy an extended warranty.
Starting Score: 675
