12% interest car loan?? Bad credit. 72 terms??

[Anonymous]

Hi all! This is my first time posting on this form so any help would be greatly appreciated!! Today went to a Hyundai dealership and I am looking to purchase a new car, it will be the first time I buy a car all by myself (prior cars were co signed). My question is I am not sure what I'm getting into the something good. I have very bad credit. My credit score is currently 477 and the bank approved me for a 12% interest car loan for 72 months. My monthly payment will be $375. I just want to get some input and see what you guys thought and if you have anything questions or what I should tell them, tonight I was there for three hours and I told him that I would think about it and come back tomorrow. I know my credit score ruins things for me..maybe I can refinance after a year??? Thank you!!

[Anonymous]

Is this your FICO score or your score off of Credit Karma? 

[Anonymous]

Fico score

[Anonymous]

The advice I would give is not to purchase a new car honestly... unless you are only getting the loan in hopes of boosting your credit score. You would but a cargo ship in interest over the life, I am frankly suprised that the interest rate is only 12%. IF you can pay the loan off in 6 months get whatever car you want but if not I would get the cheapest car you drive safely and work on getting your score up. 

[stellar]

You can try to go through a credit union for financing now.  Or try capital one's prequalifier.  

Or you can take the deal and refinance in 6 months with a credit union like DCU, Penfed, Navy Fed.

Don't be so hard on yourself, most of us have also had credit scores in the 400's at some point.  Read here and you can change your scores over time.

[Anonymous]

Is there a particular reason your score is so low? You may not be able to refinance if they are other underlying factors keeping your score low so keep that in mind as others chime in. 

[Anonymous]

I to I'm a bit surprised that the rate is "only" 12% (which is horrible, no doubt) however IF as mentioned before IF it really is a step 1 in a true Rebuild

Otherwise...

And honestly, if you don't have a LARGE down payment and I mean LARGE... The high % rate coupled with the immediate depreciation makes it difficult to refi because the car's value vs the loan required becomes very very difficult... Again without a LARGE down.

Many, many ppl get stuck in this situation...Even those with decent credit because cars lose value at a rate much quicker than the debt to loan ratio of what ppl buy.

This has gotten more problematic as car prices increase and Americans fail to put ' token' amounts down....That 1000-1500 barely touched tax and tags, these loans are many times 110-120% LTV + 12% c'mon now....You can't refi THAT mess!

This is why tydawg cringes at even attempting this almost No Win situation and there isn't a WIN available, just degrees of losing, truth be told.

Again, if there are zero other choices...It is what it is
However as mentioned...One needs to really soul search, what the deal is and what the plan of ACTION not talk is gonna be

You said you've had cosigners in the past, so that means you should have built some credit...Which obviously went south if you're sub 500, still.

You've got to think long and HARD...Can you do this, this time are you truly READY....What was the issue before, have you changed or is this just the Next impulsive move you might not need to make...

Just don't bite off more than you can chew, friend
Remember it's a CONTRACT and based upon today's market 12% is a crap rate...Years ago less so but today

Hey wait is this a used car?
If it's used AND taken over a long term like 6 years, then the rate is absolutely much more acceptable, much more

But, if it's brand new, I stand by horrible...

You might want to buy a 'relatively' cheap car...Even a decent 5 to max 8k car could garner a payment in the 100s where you can double up your payments, build credit, drive a decent car but because of the overpay only pay a decent amount in %

*Again, even though the actual % rate number will still be high because you can double and or triple a $140/mo payment you'll eat away at that loan at a rate, not generally possible at $375/mo

Just my 2 cents, as a way to CYA

[Anonymous]

Wow!! Thank you so much for your super well thought out response.
Yes I am planning to rebuild my credit. I have a few things like student loans and mistakes from when I was younger that really is messing me up but I am getting down to it and paying off what I can and paying things on time. I can't live with a bad credit score forever especially when I try to buy a home
If I pay every month on time will this help me with my score? I applied for credit cards but everyone says no, can you please tell me some ways how I can help repair my credit? I know I need to pay down my debts...
I can afford the monthly payment and insurance but I just don't know if this is my only option at this dealer.
The thing is my car got stolen and totaled in November and when I purchased the car I bought a supplemental insurance that if it got stolen the insurance gives the dealer $5000 as a down payment for a new car. There are only new cars at the dealer and the 5k is ONLY for this dealership I don't have money for a down payment anywhere else and the bank that approved the 12% is because I have been financing with them since 2012 and have paid on time.

[Anonymous]

Wow!! Thank you so much for your super well thought out response.
Yes I am planning to rebuild my credit. I have a few things like student loans and mistakes from when I was younger that really is messing me up but I am getting down to it and paying off what I can and paying things on time. I can't live with a bad credit score forever especially when I try to buy a home Smiley Sad
If I pay every month on time will this help me with my score? I applied for credit cards but everyone says no, can you please tell me some ways how I can help repair my credit? I know I need to pay down my debts...
I can afford the monthly payment and insurance but I just don't know if this is my only option at this dealer.
The thing is my car got stolen and totaled in November and when I purchased the car I bought a supplemental insurance that if it got stolen the insurance gives the dealer $5000 as a down payment for a new car. There are only new cars at the dealer and the 5k is ONLY for this dealership Smiley Sad I don't have money for a down payment anywhere else and the bank that approved the 12% is because I have been financing with them since 2012 and have paid on time.

[Anonymous]

1) I sorry to hear you're in such a bind, and you're in a pickle, no doubt.

Not gonna lie, I see where you are coming from...
But what scares me itch less is
When you say you've got NO MONEY for a down payment but you FEEL you can handle the note and insurance

Just being honest.... it's like the beginning of a movie I've seen a gazillion times the one where you want to yell Oh ish and RUN to the character on the screen because you know what the likely ending is gonna be.

I say this because, you've sorta shown yourself that in the case of a hiccup (and they are a part of life, that's just life...And you WILL have others, we all do) that being without a strong cushion puts you in a freaked up spot.

That is where we are today, get it😎

You must IMO still consider a commuter car...Even if it means NOT using that 5k come on at the dealer.

Truth be told...You can get a very nice 8-10 y.o. car...Where a finance company will lend you say a TOTAL of 4-8k

Reducing your debt load, your car note, as well as your insurance premium....All the while still building your credit of on time payment history...Just with a more manageable debt load allowing you room to pay down this other stuff and do a credit clean up.

To the point where you are financially comfortable, them even if it's as early as 8-10 months from now...Just parlay the car you've been driving as a trade and move up.

Your rate would be better at the time, after showing on time payments and some grass would have grown under your feet, such that you aren't making desperate decisions under the gun.

Even a 3-5k dollar car will get you around for awhile, while YOU get a handle on what moves you need to make...

I just don't like the whole 6 year commitment...Just because...When you're running broke and desperate many times you jump from frying pan to fire without realizing upfront

Just trying to help you consider ALL options
Life is long..Screw that 5k if it's gonna put you in a position of 'just can afford it' IF all goes well because you've gotta have cushion, especially as you build and reboot your financial health.

Now, if the 5k is combined with some crazy manufacturer rebate, where the equity in the car is gonna be sweet and you truly can handle the payment with robbing Pete n Paul...By all means go for it

Because the same thing goes a few payments and a bit of clean up and you can refi by the summer or fall

Just be brutally honest with yourself about your means, including a cushion 😊