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Frequent Contributor
Posts: 453
Registered: ‎01-03-2012
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PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

I have never had a car loan before, but the numbers don't seem to add up for me.  It's not necessarily a BIG deal, as the loan isn't that much but I wanted to get some thoughts from MyFico friends...

 

I purchased a home in September of last year. My mortgage is $354/mo, I have 10 open lines of credit and when the dealer pulled my credit I was under 25% utilization (now under 10%, as I paid the cc's on Friday and went to dealership Saturday {was not planning on getting a car last weekend but I saw one I liked online and went for it}). My lowest score was a 665 EQ. My highest score was TU at 695.

 

I purchased a 2004 Honda Element EX. It is in excellent condition, carfax report had all service history by dealer, a very well taken care of vehicle... but had 120,700 miles. I paid asking of $8999, put $4000 down. With taxes and title, my loan is for roughly $6300.

 

I did this Saturday, so the banks were closed, but I was approved for financing and able to drive the car home. The rate I was quoted was 16% for a 48 month loan. Payments are about $189/mo. I also went with a warranty and GAP (due to high mileage, but gaskets, electrical, engine, etc included). At this rate and with warranty and GAP, my payments will be roughly $245/mo.  I am able to do this with no issues, but again... the banks weren't open then.

 

I received a call from Wells Fargo yesterday to verify some information. They also hold my mortgage loan.  

 

The only collections on my credit are 2 medical bills from 2007. Everything else is in good standing.  7 of my 10 credit accounts were just opened last month. I really think I'm good for a better interest rate, but, again, I have never had a car loan.

 

Is there anything I can do?  Any advice? Suggestions?  I am very very happy with the car, fine with the price, it fits my family perfect, and it's a Honda in excellent condition and should last at least to 200,000 miles with proper maintenance. I just want to know what my options are as far as getting a good rate and what I should be at.  16% seems high...

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Current Score: EQ 665 EX 687 TU 695


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Valued Contributor
Posts: 1,057
Registered: ‎09-29-2009
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

The rate does seem a bit high for your credit scores. Was the loan through Wells Fargo? It has been reported that some dealers will pad the interest rate a bit to make more money for themselves. This is one of the reasons that forum members generally advocate shopping a bit for a loan before you go to the dealership. That way you have an idea of what rate you should / can qualify for. But that is water under the bridge now in your case.

 

It could also be that because of the age and mileage on the vehicle as it sits that the loan was more difficult to sell and the bank demanded a higher rate to cover it. Because you put such a large down payment you may not be in a negative equity situation even with the extended warranty and gap coverage. Do you have any idea what the "book value" of the vehicle is? You may be able to shop around for a refinance even before you make payments. Perhaps if you have a relationship with a credit union or another bank you may check in with them.

Best financial advice I ever got: "Just imagine what an adult would do and do that."

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Valued Contributor
Posts: 1,453
Registered: ‎04-14-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

I think your rate is too high at 16%, but yes it might be the age and mileage of the car. Probably because it was dealer financing. The last car I bought....my scores were only around 630 and I got 6% going to the bank.

Most banks do not like to finance a car more than 7 years old, but I would certainly go talk to your bank or CU and see if they can help you.

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Valued Member
Posts: 37
Registered: ‎06-26-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

It looks to me like you hve jobbed to the point of criminality! First of all with your fico score of 665 and 695 and with a down payment you should have never gotten such a high rate of 16%, should have been 7 or 8% max especially from the bank that is holding your mortgage but even so using your numbers of 8999 asking price you paid and 4000 down which begs the question why gap insurance?, leaves you 4999 loan at 16% for 48 months using a financial calculator levers you with a payment off $122 a month for 48 months.  If I was you I would contact Wells fargo and let them know exactly what happed with your loan,  The dealer probably got you approved thru WF for 6 or 7%, I would also go the dealer and inform him of this conversation, Immediately cancel the extended warranty and gap insurance and if you want the extended warranty buy it online where it will be much cheaper, do this ASAP!!  Dealer must have kept the differential between 16% and the 6 or 7 % you probably redeiver from WF, GoodLuck!

2fst4u
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Registered: ‎01-03-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

Taxes and interest bumpped the price to 10k ish... But what do I do? Wells Fargo doesn't have the loan, they are just one bank that is considering financing me.
Cap1(sc) 550, Cap1 750, Walmart 750, Home Depot 3000, Amazon 700, US Bank 1500, Childrens Place 1100, JC Penney 700, Old Navy 700, PayPal 700, Torrid 700, Lane Bryant 150, Avenue 500, OSP 500, Amex Blue 2000, Disc it 1000, Walmart Disc 2200, Old Navy Visa 1700, Mortgage 09-2012, Car Loan 03-2013



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Valued Member
Posts: 37
Registered: ‎06-26-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

With your credit scores and 4000 down anybody wil finance you, You obviouly let the dealer run your credit and as I said earlier he Jobbed you, Get your own financing, go to a credit union, go to a local bank, go anywhere to get away from that dealer for financing!!


LondonMassey wrote:
Taxes and interest bumpped the price to 10k ish... But what do I do? Wells Fargo doesn't have the loan, they are just one bank that is considering financing me.

 

2fst4u
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Posts: 453
Registered: ‎01-03-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

just got off the phone with Wells Fargo and they said 15.5 percent but I looked at the sales contract and it says 14.5 percent. I guess it went down because of the warranty.
Cap1(sc) 550, Cap1 750, Walmart 750, Home Depot 3000, Amazon 700, US Bank 1500, Childrens Place 1100, JC Penney 700, Old Navy 700, PayPal 700, Torrid 700, Lane Bryant 150, Avenue 500, OSP 500, Amex Blue 2000, Disc it 1000, Walmart Disc 2200, Old Navy Visa 1700, Mortgage 09-2012, Car Loan 03-2013



Current Score: EQ 665 EX 687 TU 695


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Frequent Contributor
Posts: 453
Registered: ‎01-03-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

I mean right now with the dealer financing is 14.5 percent...
Cap1(sc) 550, Cap1 750, Walmart 750, Home Depot 3000, Amazon 700, US Bank 1500, Childrens Place 1100, JC Penney 700, Old Navy 700, PayPal 700, Torrid 700, Lane Bryant 150, Avenue 500, OSP 500, Amex Blue 2000, Disc it 1000, Walmart Disc 2200, Old Navy Visa 1700, Mortgage 09-2012, Car Loan 03-2013



Current Score: EQ 665 EX 687 TU 695


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Posts: 72
Registered: ‎11-19-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

I think you would have a good shot at DCU at 5.9%

Frequent Contributor
Posts: 453
Registered: ‎01-03-2012
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Re: PURCHASED A CAR ON SATURDAY (FIRST CAR LOAN EVER) HAVE QUESTIONS!

DCU?
Cap1(sc) 550, Cap1 750, Walmart 750, Home Depot 3000, Amazon 700, US Bank 1500, Childrens Place 1100, JC Penney 700, Old Navy 700, PayPal 700, Torrid 700, Lane Bryant 150, Avenue 500, OSP 500, Amex Blue 2000, Disc it 1000, Walmart Disc 2200, Old Navy Visa 1700, Mortgage 09-2012, Car Loan 03-2013



Current Score: EQ 665 EX 687 TU 695


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