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

[dparhanr]

I do not have much to contribute other than my personal experience and details. I just financed a vehicle for the first time. I am 22 and work full time at 11/hr. The only approval I was granted after exploring several different options was at 29% for 42 months on a vehicle that cost 7,300 out the door. I have a very thin credit file = no negs other than inquiries, one card with a $300 limit (4 months old), and a $5,500 student loan in deference (1 year old). I put down $1,000 and did not have a co - signer. My score here shows a 617 but the one they pulled and showed me was a 637.

[dparhanr]

For what it is worth, my game plan is to pay off this car note from hell in under a year to avoid as much interest as possible or refinance ASAP.

[enharu]

@dparhanr, once your credit card history reaches 6 months, try to apply for a few credit cards, especially those with 0% promo, and hopefully you get a decent limit.

Pay off the car loan using those cards. Even if there's no 0% promo, most credit cards don't even have that high of an interest rate. However, your fico score will take a hit because of high utilization.

[dparhanr]

Is 6 months a huge mile stone for revolving credit acount? I wouldn't expect to be approved for anything that would  even come close to covering the cost of the car. I know I jumped the gun a bit, but I have applied for 2 unsecured cards with an average approval score in the very low 600s and was denied for both. 

[-Wade-]

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@black_citi wrote:
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.

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32.99% that is highway robbery!!!!

[notfancy]

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@dparhanr wrote:

Is 6 months a huge mile stone for revolving credit acount? I wouldn't expect to be approved for anything that would  even come close to covering the cost of the car. I know I jumped the gun a bit, but I have applied for 2 unsecured cards with an average approval score in the very low 600s and was denied for both. 

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Yes, it is. Some people can't even generate a score at all with out 6 months of history. Try some pre-approval sites at 6 months and keep your UTL on your CC down.  Also in another 6 months, maybe less, you can try to refinance that car loan. Try building a relationship with a local credit union. They almost always have the best rates for cards and loans because they are member driven and not-for-profit.

[shondra0609]

I'd say the best gift you could get your cousin is a membership to MyFico and help him learn about credit.

[black_citi]

Yes, I agree Shondra. This site has definitely helped me a lot. I will tell him about this site.

[dparhanr]

Notfancy, Thank you for the input. This first card will be at the 6 month mark very soon. The utilization on it is temporarily way too high I am sorry to say. However, I will pay it off out of my next paycheck before my bill cuts. Between that card getting some age on it and starting to make payments on this new auto loan, I am hoping that this year will be a great one for my credit profile.

For what it is worth, I absolutely love the new car. Even with the insane rate, it is serving me well and almost paying for itself considering it is saving me over 200 dollars a month in gas.

[12njoy]

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@dparhanr wrote:
Notfancy, Thank you for the input. This first card will be at the 6 month mark very soon. The utilization on it is temporarily way too high I am sorry to say. However, I will pay it off out of my next paycheck before my bill cuts. Between that card getting some age on it and starting to make payments on this new auto loan, I am hoping that this year will be a great one for my credit profile.

For what it is worth, I absolutely love the new car. Even with the insane rate, it is serving me well and almost paying for itself considering it is saving me over 200 dollars a month in gas.

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I believe you said your score was in the 620's and/or 630's.  If so, try for a Walmart card after your card reaches 6 months.  While the Walmart (store card) won't help with the car (assuming you wanted to pay it off using credit cards), but I've found that Walmart is generally easy to get with a score in the 620's.  They do start you out low but GE is pretty good with credit line increases.  Good luck to you.  It's impressive that you are thinking this through at your age.  When I was your age, credit was the furthest thing on my mind and I've paid the price for that.