Reply
Regular Contributor
black_citi
Posts: 183
Registered: ‎12-20-2013
0

32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

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.
EX 673, EQ 686, TU 686
Current Credit Cards: AMEX Blue Cash Everyday/$1000, Barclay's Rewards Mastercard/$1000, Capital One Quick Silver/$2000, Citi Diamond Preferred/$1000, BankAmericard Cash Rewards/$500, DCU Platinum Visa/$10,000

Member
probation1984
Posts: 24
Registered: ‎01-05-2014
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

32.99% is abnormally high, however you stated that he placed a downpayment on the car and it is older. Both of those two things you mentioned do not factor into his interest rate. I could be mistaken, but the interest rate is based soley on the credit score (or no credit score.) People with bad or no credit obviously have much higher interest rates than people with very good credit. For example, when I bought my 13k dodge ram a yar ago, my score was only like a 519 or something bad like that and I received interest around 17.9% . As of now I have my score up to a 638 FICO (Middle Score) and i was able to have the interest on my truck lowered after they ran my credit and not its only at 7.9%. The 32.99% is obviously ridiculousy high, however I'm pretty sure lenders can charge whatever they want, the client just doesnt have to take the offer if the interest is outrageous. What your cousin needs to do is pay his truck on time EVERY month (no late payments at all) and also open up a SECURED CC and keep the utilization % low on that (10-15%) and pay it off when it posts to the account. This will help build them good credit for the long run and in 12 months or so he could have his truck either re-financed or have the interest lowered with a better score.

Member
probation1984
Posts: 24
Registered: ‎01-05-2014
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

[ Edited ]

Let me revise my statment above slightly: The Interest Rate is not only based solely on the credit score, but also the credit history. Didnt want to leave that part out haha

Regular Contributor
black_citi
Posts: 183
Registered: ‎12-20-2013
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

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.
EX 673, EQ 686, TU 686
Current Credit Cards: AMEX Blue Cash Everyday/$1000, Barclay's Rewards Mastercard/$1000, Capital One Quick Silver/$2000, Citi Diamond Preferred/$1000, BankAmericard Cash Rewards/$500, DCU Platinum Visa/$10,000

Regular Contributor
black_citi
Posts: 183
Registered: ‎12-20-2013
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

Oh and sorry about the double posts :smileytongue:
EX 673, EQ 686, TU 686
Current Credit Cards: AMEX Blue Cash Everyday/$1000, Barclay's Rewards Mastercard/$1000, Capital One Quick Silver/$2000, Citi Diamond Preferred/$1000, BankAmericard Cash Rewards/$500, DCU Platinum Visa/$10,000

Member
probation1984
Posts: 24
Registered: ‎01-05-2014
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

I would definitely talk him into a SECURED CC so he can get that credit history going. He may not like that you have to put a deposit down on the scured cards in order to use them, however the deposit is fully refundable if he pays on time and doesnt owe any money. He will also more than likely get moved into an UNSECURED CC if he does well with his secured card. No credit history is not good, but one thing he has on most people is he doesnt have any BADDIES on his history yet. Make sure he keeps it that way lol...They are like nagging little flies that wont go away haha

Regular Contributor
CJIII29
Posts: 151
Registered: ‎12-15-2013
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

Never heard a auto at 32.99%?

Capital One Secured Credit Card $600 credit limit Best Buy Credit
Card $2000 credit limit My Fico scores: Experian 710, Equifax, 702, Transunion 716
Senior Contributor
drkaje
Posts: 3,492
Registered: ‎07-25-2008
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

Reads to me like they saw him coming. Impatient, desperate, and willing to buy an extended warranty.


Starting Score: 675
Current Score: EX 753 FICO, EQ 737FICO, TU 738
Goal Score: 776 FICO


Take the FICO Fitness Challenge
Frequent Contributor
Kratos-TM
Posts: 429
Registered: ‎05-23-2013
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

It will be good if he can have 12 months reported of payments on the car before he pays it off. That will help build the history. Also like someone said, open up a secured CC, and in about 2 years, he'll have a great score and minimum history to play in the credit world.

Myfico scores.....
EX... 805 (11-10-13)
EQ... 810 (12-02-13)
TU... 810 (12-02-13)
Epic Contributor
Creditaddict
Posts: 20,896
Registered: ‎10-23-2007
0

Re: 32.99% AUTO LOAN INTEREST FOR 30 MONTHS!!!!

So a few things come to mind.

1. He clrearly had some type of credit (most likely old baddies) because he had a score.

2. This sounds like a buy here pay here type of loan... should have considered Roadloans (still might be worth checking at refinancing) I have never heard of a interest rate that high that isn't from a buy here pay here.

3. he needs to address what's going on with his credit reports, can he dispute wrong things, can he pay anything he needs to?

4. get a secured credit card are two:

4a. Capital One - do the pre-qual right on the website and see if he gets offer for something or apply for secured.

 

Fico Scores: EQ- 682 DCU, TU 696 Walmart, EX 695 NASA(10-6-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Navy Federal Cash Sigi Visa $50k (AU)
Lowest Limit: Target $200
63 Cards and Counting :smileytongue:

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
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}