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New Member
Posts: 7
Registered: ‎03-15-2013
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Trying to rebuild my credit, but auto loan won't help

I'm the only source of support for my husband and two minor kids. During 2007-2009, I was unemployed and used up all of my savings to keep the family going. I had just gotten reemployed when my husband and daughter suffered brain injuries that left me with huge bills. Needless to say, I had great credit before and awful credit now because the bills wrecked my finances. I've been slowly trying to rebuild my credit and have had a good record with some small credit cards I got to reestablish myself. I had to get a car so I could continue commuting to work 25 miles away and I had every door closed to me. I ended up dealing with an auto seller that promised payments of about $200 and, via last-minute shuffles, changed the interest rate twice so that it's now an APR of 22.43 percent, which is loan sharking and usury. My question:  What is the reasoning behind charging interest rates that high? If anything, it sets up a person reestablishing credit for failure. I tried refinancing at my bank and they wanted a co-signer, but my husband cannot work and doesn't have an income. When should I try refinancing? A year, two years? What type of credit score would allow me to refinance so that I can pay less interest? Even 15 or 16 percent would be better. Any suggestions would help. I am determined to get my good credit rating back and I'm willing to make sacrifices if I know I will get somewhere. 


Starting Score: 560
Current Score: 572
Goal Score: 750


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Established Contributor
Posts: 839
Registered: ‎10-25-2011
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Re: Trying to rebuild my credit, but auto loan won't help


Mambisa wrote:

I'm the only source of support for my husband and two minor kids. During 2007-2009, I was unemployed and used up all of my savings to keep the family going. I had just gotten reemployed when my husband and daughter suffered brain injuries that left me with huge bills. Needless to say, I had great credit before and awful credit now because the bills wrecked my finances. I've been slowly trying to rebuild my credit and have had a good record with some small credit cards I got to reestablish myself. I had to get a car so I could continue commuting to work 25 miles away and I had every door closed to me. I ended up dealing with an auto seller that promised payments of about $200 and, via last-minute shuffles, changed the interest rate twice so that it's now an APR of 22.43 percent, which is loan sharking and usury. My question:  What is the reasoning behind charging interest rates that high? If anything, it sets up a person reestablishing credit for failure. I tried refinancing at my bank and they wanted a co-signer, but my husband cannot work and doesn't have an income. When should I try refinancing? A year, two years? What type of credit score would allow me to refinance so that I can pay less interest? Even 15 or 16 percent would be better. Any suggestions would help. I am determined to get my good credit rating back and I'm willing to make sacrifices if I know I will get somewhere. 


Welcome to the forums. There is no magic time frame on when to try refinancing, but to best answer your question: You can refinance any time you want, but you should start trying as soon as your credit score shows any significant improvement. You can use your definition of significant improvement. I'd say whenever you make it to the next tier in credit score. Be sure to make big payments if your budget allows so that you have equity in your vehicle when you try to refinance. I know you may have big medical debts. Also, dont forget to visit the rebuilding your credit section in the forums.

 

Hope this helps

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.
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Posts: 7
Registered: ‎03-15-2013
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Re: Trying to rebuild my credit, but auto loan won't help

Thank you for the good advice.


Starting Score: 560
Current Score: 572
Goal Score: 750


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Established Contributor
Posts: 839
Registered: ‎10-25-2011
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Re: Trying to rebuild my credit, but auto loan won't help

You're welcome

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.
Frequent Contributor
Posts: 403
Registered: ‎12-10-2012
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Re: Trying to rebuild my credit, but auto loan won't help

Very sorry to about your family,  Hopefully things get better for you and your loved ones in the future.

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New Member
Posts: 7
Registered: ‎03-15-2013
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Re: Trying to rebuild my credit, but auto loan won't help

Thanks. I'm a bit bummed because the loan inquiries have lowered my credit score by several points. One dealership I contacted must have sent out my file to 10 lenders and they've all come back as negative. I'm working with Cap One to pay my monthly car payment as half payments every two weeks to work toward the principal and I've opened a credit union savings account so that I can ask about refinancing in a year or so when things have settled a bit. I am so determined to get back the good credit I had until 2007-2009 when I had the worst two years of my life. 


Starting Score: 560
Current Score: 572
Goal Score: 750


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