01-11-2014 10:22 AM
He actually said he was going to try and refi through his credit union. They denied him a loan at first because he had no credit but since he has a loan now they said he can refi in about 6 months at a MUCH lower rate. They also said in about 6 months he can get a secured card. Yeah, BHPH places are more known for those extreme interest rates. That's why I told him to go to a new car dealership instead but I see even they hit him hard on the interest. I don't have a CU membership yet myself, but next week I am going to apply and see if I can get a refi through them.
01-12-2014 04:12 PM - edited 01-12-2014 04:13 PM
The way you describe his attitude towards things sounds like someone needs to sit him down and have a face to face reality check. He needs to come onto myfico and read all the horror stories about people jumping into things in their younger years only to find themselves filing bankruptcy down the road. Seriously, he sounds like a ticking time bomb. I'm four years out of BK and I HOPE to buy a new car next year, but i'll be putting down between $7-$9k when I do.
It doesn't sound like he was receptive to any of your advice. If he won't listen to you, find someone he will. If he won't listen to anyone, let him fall hard. That should teach him a lesson.
$8k for a car with 122k miles on it? He works two jobs and wants a BMW? He's not living in the real world.
01-12-2014 05:13 PM
01-14-2014 03:25 PM
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.
I would also make it a point to ask him to just "give" you $6350, because that's pretty much what he's doing with this car. It started @ $6100 but will cost him $12450 after it's all said and done. Tough love sounds like it's needed in this case.
| CSP (AU) $12,000 | Amex PRG (AU) | United $6,000 | OCCU $12,000 | Ink Bold | GM $3,200 | DCU $7500 | Luthansa $9000 | SPG $6,000 | Citi AA Executive $11,000 | Ink Plus $5,000 | EX 2/7 697 | EQ 10/27 721 | TU 12/15 719 |
01-15-2014 01:03 AM - edited 01-15-2014 01:05 AM
This feels to me as if the dealership saw him coming and took him for a little joy ride. 32% APR on a 2003 truck is ridiculous! I don't even believe he can refinance this vehicle now considering the age...whats the limit? 7 years older or less than the current year to be eligible for refinance? You live and you learn. I'm just glad you didn't co-sign on this loan!!
01-15-2014 05:31 AM
01-18-2014 02:40 AM
01-20-2014 05:48 AM
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.>> About myFICO