topic Re: Bad car buying experience, need refinancing. in Auto Loans

Bad car buying experience, need refinancing.

Cleaningitup2016 — Sat, 02 Sep 2017 04:49:35 GMT

So I went to a HUGE (owns 9 dealerships in the area) dealer. Who I would assume be honest.

Credit isn't the greatest, but not terrible, a few collections I'm working on getting off, about 1200 dollars worth.

Financial situation improved income-wise, but was going to cost more than my current car was worth, in repairs, about 2500.

I got a GREAT DEAL on a used car, and they said "We finance anyone".

Used rates for those with excellent credit on this car would be about 3-4%, I asked the salesman several times to show me the interest rate.

I couldn't care about the payments, they were cheap, was told flat out "uh..my finance manager hides that from me".

So it wasn't until I signed the paperwork, that I saw up in the corner..that the APR of this loan, which I expected to be 9-11%, was 22.8%!!!!

So now I am looking to refi, but not sure where to turn to, I doubt a regular bank would work, but looking at a credit union.

Only issue? I'm self employed, and for whatever dumb reason, most banks do NOT consider self-employed people to be actaully "employed" and will not respect you. They want actual paystubs.

Re: Bad car buying experience, need refinancing.

Anonymous — Sat, 02 Sep 2017 13:31:32 GMT

How much do you owe and how much is the car worth? That is going to be the first hurdle, as people are generally underwater with loans at that high of an interest rate. (And you generally can't refinance until the amount owed/value of the car is balanced.)

What are your FICO scores and current credit profile? NFCU, PenFed, and DCU are all good bets for financing if your profile meets their criteria.

You can also do a Capital One auto prequal . . no hard pull . . . could at least give you a better idea where you stand and what options might be available to you.

Re: Bad car buying experience, need refinancing.

Appleman — Sun, 03 Sep 2017 00:41:03 GMT

Sorry to hear your story about the interest rate. There are so many tales like this on the forum of people not reading the basics of their contract prior to signing. And car contracts do not have a buyers remorse option where you can just return things later.

SteelerNYC has given you all the advice I would related to car value.

As you are trying to get things refinanced, pay as much as possible extra toward the car. every $100 extra payment (make sure they are applying it to principal) today will save you $22.80 in interest over the next year.

If you feel comfortable, share a few more details of your credit situation. Current scores etc. If you have income documented on your tax returns that may work when applying for a refi.

Hopefully more people will chime in and offer support and advice.

Re: Bad car buying experience, need refinancing.

Cleaningitup2016 — Sun, 03 Sep 2017 01:47:29 GMT

Well I called two CU's and they just pull my report and say no.

Kinda steamed most lenders won't look past a credit file, REGARDLESS of income.

So now I'm exploring some possibilities.

1. Need to find out if the lender front-loads the interest, meaning if you pay it off in one week, still owe the interest.

2. Paying off the 1.4k or sold in old badies and THEN trying to refi.

3. Seeing if a CU will give me an auto loan for half the balance, pay half the loan off, for an interested reduction.

Also kinda pissed the dealership kept hiding the interest rate from me until it was too late. I thought they were required by law to disclose it??

My fico is 570 last I checked, a few charge offs, no collections, no lates. Charge offs are a couple years old.

Re: Bad car buying experience, need refinancing.

Cleaningitup2016 — Sun, 03 Sep 2017 03:48:49 GMT

Okay, did some searching and it is federal law, that a lender must disclose the "cost of credit" including the interest rate.

When asking, I was told by the salesman "the finance manager tends to hide that stuff from me".

I think I'm going to go to the main dealership Tuesday and tell the head honcho they violated the truth in lending act.

Re: Bad car buying experience, need refinancing.

Anonymous — Sun, 03 Sep 2017 04:27:31 GMT

If you look on the contract you signed, i bet there is a spot where it says that only the written word counts and nothing verbal was promised. This car buying experience is a lesson, garner everything from it you can. And the interest rate in the corner satisfies the federal law and serves as your notice.. And even if he told you that, and you believed him, it still didn't answer your question. Finally, it is never "too late" to walk.

Sorry you feel bad, but as you can see, banks are not beating a path to your door to finance/refinance. And your credit score is low, because you haven't honored past obligations. There is a strong possibility that the dealer may have some give back in the event you don't pay, so there is the possibility of ongoing dealer risk.

Rule of thumb: Don't make a big purchase from a weak position.

Experience it's always that thing you get right after you needed it.

Edit to help a bit more:

1. That would be a rule of 78ths loan, or a prepayment clause. That should be in the docs you signed, if it exists.

2. Always a great idea to payoff past debts before taking on fresh debt. Also, going forward under new models this will definitely help your score. Win-win. Plus, as in number 3, If you can pay the car down that much, why haven't you repaid/addressed the last loans. You'll need an answer for that at the bank. There really isn't much good there.

Re: Bad car buying experience, need refinancing.

Cleaningitup2016 — Sun, 03 Sep 2017 08:20:42 GMT

Another thing I forgot to add..

When I went to the dealer, I had my heart set on a particular car, a 2014 Ford Focus with 76,000 miles.

They said the lender would not make a note, because it had too many miles on it.

So they showed me another car, a fully loaded 2015 Chevy Sonic with 35,000 miles.

The car I wanted, was 8400 dollars, this car was 15,000, and payments at 330 per month.

I walked out, and they called me later, saying they had another car.

Went to look at it, didn't like it, asked if I could instead buy the focus.

Now I feel cheated..I really think they gave me that as an excuse to upsell me to a vehicle that was twice as much.

Re: Bad car buying experience, need refinancing.

Anonymous — Sun, 03 Sep 2017 08:31:59 GMT

Handle your charge offs, make extra car payments. Get your scores up and then you can possibly refinance.

Re: Bad car buying experience, need refinancing.

Gidgetmom — Sun, 03 Sep 2017 10:21:08 GMT

@Cleaningitup2016 wrote:
Another thing I forgot to add..

When I went to the dealer, I had my heart set on a particular car, a 2014 Ford Focus with 76,000 miles.

They said the lender would not make a note, because it had too many miles on it.

So they showed me another car, a fully loaded 2015 Chevy Sonic with 35,000 miles.

The car I wanted, was 8400 dollars, this car was 15,000, and payments at 330 per month.

I walked out, and they called me later, saying they had another car.

Went to look at it, didn't like it, asked if I could instead buy the focus.

Now I feel cheated..I really think they gave me that as an excuse to upsell me to a vehicle that was twice as much.

A friend of mine had a similar experience regarding getting a loan for a used car. Apparently, the miles on a used car can be a deal breaker for the banks to offer financing.

Luckily, the car she wanted fell within the range for decent financing.

This was a tough lesson to learn, but I'm sure next time you won't sign a contract without fully reading and understanding the terms. The dealer got you the best financing available for your credit profile. It was up to you to decide if you wanted to take it.

The likelihood, with your credit file, that you will be able refi is slim. I would make my payments for 6 months, work on my credit to bring up the score, and then try to refi. I wouldn't take any long road trips and try to keep the miles low during that 6 months, as you now know that mileage will affect financing.

I'm sorry that you feel cheated....but in the end...you signed the contract.

Re: Bad car buying experience, need refinancing.

Anonymous — Sun, 03 Sep 2017 10:46:59 GMT

@Cleaningitup2016 wrote:
Okay, did some searching and it is federal law, that a lender must disclose the "cost of credit" including the interest rate.

When asking, I was told by the salesman "the finance manager tends to hide that stuff from me".

I think I'm going to go to the main dealership Tuesday and tell the head honcho they violated the truth in lending act.

They didn't violate the Truth in Lending Act. Just because the salesperson told you that is meaningless. You said in your first quote that the contract had the rate. As long as they show that on the contract along with the total of your payments, they have met the requirements of the TILA. Not defending the dealership or its practices but you need to accept some responsibility for signing the contract without asking the rate and then driving away with the vehicle. All you had to do is say 'nope, not accepting that rate' after you saw it and the hand them the keys back. As others have said, that rate may have been the best that you could get with your profile. It's too late now to spend all your energy complaining about what happened and instead focus on paying it down and later on trying to get it refinanced.

Re: Bad car buying experience, need refinancing.

Cleaningitup2016 — Sun, 03 Sep 2017 11:06:41 GMT

Well I found the dealer terms contract with Santander..

On a 60 month term, which mine was, the maxinum amount of miles for a loan is 90,001 miles.

So it turns out they did deceive me into buying a more expensive car, and the proof is of course..the fact I was able to buy the car after being told I couldn't.

Re: Bad car buying experience, need refinancing.

Cleaningitup2016 — Sun, 03 Sep 2017 11:15:25 GMT

"All you had to do is say 'nope, not accepting that rate' after you saw it and the hand them the keys back"

After accepting the "proposal" or whatever they call it, they had me sign the paperwork.

Before signing it, they were outside attaching a temp tag, the papework also had "SOLD" in big bold letters on it.

So I assumed it was a "done deal".

The proposal also had something along the lines of "offer is binding is all parties agree to terms set forth".

Re: Bad car buying experience, need refinancing.

Anonymous — Sun, 03 Sep 2017 11:17:44 GMT

@Cleaningitup2016 wrote:
"All you had to do is say 'nope, not accepting that rate' after you saw it and the hand them the keys back"

After accepting the "proposal" or whatever they call it, they had me sign the paperwork.

Before signing it, they were outside attaching a temp tag, the papework also had "SOLD" in big bold letters on it.

So I assumed it was a "done deal".

Nah, nothing is final until you drive away with the vehicle. Try not to be too down and learn from the experience so that in the future you will be better prepared. You will be able to refinance before too long so in the end the experience won't be too costly.. Wish you the best of luck.

Re: Bad car buying experience, need refinancing.

Cleaningitup2016 — Sun, 03 Sep 2017 11:31:58 GMT

I thought with the "new system" baddies don't impact your score after a year?

Or is it longer?

Re: Bad car buying experience, need refinancing.

Anonymous — Sun, 03 Sep 2017 15:47:42 GMT

You make a bunch of assumptions, many wrong, and much of what you think you know is just wrong. Not judging here, but really, take this opportunity to educate yourself.

In your first statement, you talked about a mega dealer being honest. Honestly is pretty subjective in the car business. He didn't get all those dealerships by being lose with terms, i assure you!

So, you are not alone in being $crewed by a dealer. In my day it was pretty much a rite of passage. Dealers play on emotions, and you were defenseless.

Learn what YOU did wrong. The dealer did most everything right as far as i can see. Car dealers have a saying. "There's an ass for every seat." Or, put another way, if you are in the game for more than 15 minutes and you don't know who the sucker is, you are the sucker.

You got took. You feel bad. Accept the blame. Now, like with every bad thing that happens in life, extract the good from it and move forward.

Re: Bad car buying experience, need refinancing.

Gidgetmom — Sun, 03 Sep 2017 17:25:39 GMT

Inquiries stay on your report for 2 years, but are not considered in your score after 1 year. "Baddies" (collections, lates, charge offs, etc) can stay on your report for 7 years or longer depending on the type of issue.

Sorry to hear about Santander loan and the 90,001 miles. Bet you wish you had done that research before going into the dealer.

Sucky lesson you had to learn. We've all had those "hind sight" moments.

Re: Bad car buying experience, need refinancing.

Cleaningitup2016 — Sun, 03 Sep 2017 22:06:28 GMT

Maybe it's paid collections I'm thinking of?

Re: Bad car buying experience, need refinancing.

Gidgetmom — Sun, 03 Sep 2017 22:19:59 GMT

Some scoring models will no longer count paid medical collections, but my understanding is that a collection is a collection, paid or not.

To my knowledge, inquiries are the only thing that fall off your report after 2 years. Of course, I may be wrong also.

This might be a question to search or ask the rebuild section.

Re: Bad car buying experience, need refinancing.

Anonymous — Mon, 04 Sep 2017 22:32:36 GMT

Sorry dealer got by far the upper hand on you. My family owned a small Ford dealership for over 50 years. Financing was a huge profit center. We got % of the spread on everything financed/ I would try to pay/fix the baddies and make perfect payments for 6 months. What is the prepayment clause? Some use rule of 78 while others simple interest.

Re: Bad car buying experience, need refinancing.

Anonymous — Mon, 04 Sep 2017 23:47:39 GMT

When it comes to Santander and being able to finance certain vehicles to a certain mileage you are 100% correct. Knowing this you also have to understand the fees that Santander charges when coming to higher mileage older vehicles. If you are submitted to Santander and the approval comes back with a "buy/sell" (no Rate spread) with a $991 Bank Fee (Fee that can not be charged to the buyer / consumer) and the dealer is only making a $700 profit on the vehicle (assumption) then they would of course try to switch you to a vehicle where their bottom line was not losing money. It is safe to say that very few businesses are willing to lose money because of someones credit history. It is a harsh reality to know that financing a vehicle with subprime credit could influence the vehicle they are able to buy. You also never stated whether or not you were coming to the table with any money down or "trade equity"...you said yourself that your current vehicle wasn't worth what it would cost to repair it. That means you were financing in all of the tax, title, license that comes with buying a vehicle. Auto lenders look at a lot more than just Fico score when it comes to financing subprime customers. LTV? Cash Down? DTI? Time on job? Time at residence? Own or rent that residence? Does income include overtime that might not be readily available? How many vehicles in the household? ( Yes this matters because of you don't have anything else to drive if it gets repossessed you are more likely to pay for the vehicle you are purchasing) Dealers are more often than not at the mercy of the lender when it comes to getting a subprime customer financed. With no real financial support brought to the table by the consumer then the lender has to factor the risk of taking on the loan when a customer has proven in the past to not pay such obligations.