Are all car dealers out to rip you off??

[Mothership3]

Thank you in advance anyone who reads this... I will try not to be too long winded, because I usually am.

I was just approved (and signed) a ridiculous loan for a used vehicle. The vehicle price was 11,900 for a 2008 Sedona with 50k miles. One owner car, dealership finance.
The loan application was a joint. My "husband" and I are not married, I am a stay at home mom, he makes all the income. I have a better credit score with almost no credit history, and he has decent income (60k) with horrible credit history.

My credit history is maybe 4 years old, but only that old because 2 reporting credit lines on my report(s) actually belong to family and they added me as authorized user. Which is great, because I used to not have a credit score at all. I do now, using my fico, it is 669 equifax. Now, the very first loan or credit line I have ever had myself, personally responsible for, I just got maybe 4 months ago. So far, I have been really good with it. =) go me!!

My other half.... he filed bankruptcy 7 and was discharged in dec. despite that, his credit rating, myfico equifax, is already a 639. NOW... the dealer showed us the number they got for him, and it was more like a 618. (I already understand numbers are different, sometimes from different places, and are sometimes scored differently.... oh and then there is the auto loan number or something.) the system could use some streamlining IMHO.....

Anyhow, 618 let's say, bankruptcy discharge in Dec 2012... oh, and there are two IRS liens reporting on his public records area. One fore like 45k, and the other for like 16k. A few things you need to know about those liens. 1. they were filed log before the bankuptcy on a house that subsequently foreclosed about 2 years after the liens were filed against the property. 2. the house foreclosed, and was sold at auction 3. the IRS debt that instigated those liens was ABSOLUTELY discharged in the bankruptcy. I know this is rare, and some believe impossible, but I swear to you this is true and correct info so we don't need to waste each others time arguing about how "IRS debt is not dischargable" Ok... so the friendly IRS mailed us a letter, and a letter to the clerk of court (whom reports the lien to the credit bureaus) showing an official notice of withdrawl on the larger of the two liens. The county says it can take up to 3 months before the credit agencies get the updated info applied to the reports. Fair enough, I suppose.

We brought this withdrawl form around with us, and used it to verify the release of the lien to lenders. BUT, the second, smaller lien, seems to be caught up in the system. The IRS thinks it might be valid, our attorney says NO, the smaller one is older than the one they discharged, the one they discharged was (released) was released mainly because of a rule pertaining to the date of tax year filed..... so, we are all pretty darn confident that the second lien will be cleared up eventually. Hopefully soon, our lawyer is working on it. (U may be wondering about the tax debt to begin with, but I promise you the whole thing was far more a misunderstanding than being out and out sneaking, irresponsible, or evasive.... hence why the debt was dischargable)


So, there you have it, roughly our credit profiles. We had some lenders say, "NO" credit union wouldnt finance us, my bank wouldn't do it, and a couple car dealers couldnt do it. 3 (almost 4) weeks later, we just bought a car. 17% interest, no matter the length of the loan. 48 months 17%, or 72 months @ 72%.... which I thought odd, since other dealer finance people showed us numbers that changed depending the length of the loan. Anyhow, we are exhausted, and we NEED a car.... not want, not desire.... HONEST TO GOD NEED..... do we need to finance one? I guess not. buying one much older and beat up and potentially having to throw money at it to keep it running was an option. We have gone they route before. In fact every car I have ever owned has gone that route.... hence my lack of credit rating.

We needed something more dependable, and saw it as a nessecary evil. Also, I need a credit history... because some day I really would like to buy a home. And he, he needs to build his rating back up. So here we are, 17% at 72 months..... and the plan (wich perhaps, if you are still reading along, you may say is STUPID) is to refinance as soon as the credit reports are "fixed" and reporting accurately. The other plan, is in the meantime, since we only financed 11k (I say only, but that is a boat load of money to us... but it isnt 30K) anyhow, since it is about 250.00 a month payment, we plan to pay above minimum and refi asap/or when reasonable to do so.

All of this.... and here is what I really would like to hear for folks here..... I am incredibly mistrusting of car dealers and lenders. I guess maybe just because of being in new territory. Also because i have seen mistakes other have made, like my significant other and his credit past (which is why we havent legally wed, btw) and also because I know that the job of the sales man and the job of the lender is to make themselves as much money as possible, not to look out for my best interst. This is just common sense. But I honestly don't know.... is the 17% possibly fair in our given situation? I thought we would get more like 13% maybe 15... but NOT 17. I argued this with the finance guy, even asked for the spread and the buy rate offered by the lender.... in insisted, repeatedly, that rate is 17%. There was no wiggle room, no nothing, take it or leave it..... and trust me, I seriously was toward leaving.... but in the end. I took it. I did however refuse ever add on offered, EVERY... well, except gap insurance, I took that.

AM I the biggest fool that ever was?

[Mothership3]

It might be relevant to tell you we paid 2k down cash and got 500$ for a piece of crap trade in. The trade in amount was more than fair, trust me. LOL out the dorr +++ as they say, the 11900 sell price was a total of roughly 13500, and as I said, we financed just over 11k.  numbers are approx, but darn close.

[dodfire]

Hello and welcome to the forums.....

WOW that was a long post..but I read it...lol

My opinion...you are not a fool....why?

Because I have been there.

Back in 2005 My credit was TERRIBLE....worse than yours, worse than your husbands.

I was in the same situation...WE needed a car, a dependable car..and I did not have the money to even buy a beater car.

Did the same thing as you...bought a $20k car.. 72 months 19% interest. ( sometimes you have to do what you have to do)

Is it the smartest thing financially to do? NO...sometimes we do not have a choice.

Things will get better.

NOW what is done is done.

As for the best advice I can give you.....

Make bi-weekly payments....whatever your monthly payment is...pay half every two weeks or on the 1st and 15th..whatever works...but do it...

Next

Every 6th payment....make an extra payment that month a full payment.

Work hard on repairing your credit as fast as possible and refi as soon as you can!!

[webhopper]

Hi and welcome to the forum!

I've been in the place where you are at, I've bought a car with 18% interest because I had to have one. Period.  I paid 19k for the car and paid on it for 1 year at that rate.  Then I paid 9k towards principal 1  year later and refinanced it with Chase at 5.5% for 36 months. The vehicle was paid off a year later.

Like you, I didn't go with an expensive vehicle for my income.. Like you, I took a high rate because I had to have transportation. 

You dont have to be stuck in this rate forever.  What you might do is find a credit union who will base the rate off of the primary applicant's score.  Did this with me and DH, and we got the best rate, despite his credit suffering from some Identity Theft.

[Mothership3]

Thank you both for replying!! you have helped me to feel a little bit better about it. I was so concerned that I was had.... that the financer w/ the dealership was told 13% and then he told us 17% or something. Honestly, I am not totally sure how anyone would ever find out if the financer is being honest or not. The whole deal, aside of the interest rate, was fair. The price of the car totally fair (in fact KBB says this car, this condition, would average 2-3k more nationally sold at dealership), the ease with which to deny extras, and the ABSOLUTE lack of trying to push us into any warranties or anything..... the guy did stress the gap.... but otherwise, it was a straight sale. This made me want to trust him.... but deep down I was still thinking the whole while, "It hurts someone's pride to be "had" yes, but pride aside, I am too broke to be "had" !! LOL

I appreciate the advice about paying bi-weekly. I think that is really great advice. I also like the idea of over paying and then throwing a chunk at it in 6-12 months when we refinance it. thank you both again!

Nothing I should be fearful of from here, correct? I mean the dealer can't call me in 30 days and say, "ok, just kidding, now it is 24%" LOL please say no.

One last additional point, the 250 a month minimum is about 75 dollars less than we were spending on cigs. We quit 3 months ago, so I guess now we have set things up so that we most certainly CANNOT go back to that habit.... if nothing else, we can't afford it. LOL

[Dustink]

I feel 17% was fair given the circumstances and Gap was smart. If you plan to keep the vehicle for a long time I would recommend an online warranty. I have read okay things about AutoPom.

If you pay $500 per month, you will be able to refi or trade the vehicle in around August of next year. 

The best way to find out if the dealer is being honest, is to go into the dealer with a pre-approval in hand. Then let the dealer beat the rate. I have seen people with excellent credit get double digit rates, just because they didn't know better. You getting 17% wasn't bad.

[Dustink]

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@Mothership3 wrote:

Thank you both for replying!! you have helped me to feel a little bit better about it. I was so concerned that I was had.... that the financer w/ the dealership was told 13% and then he told us 17% or something. Honestly, I am not totally sure how anyone would ever find out if the financer is being honest or not. The whole deal, aside of the interest rate, was fair. The price of the car totally fair (in fact KBB says this car, this condition, would average 2-3k more nationally sold at dealership), the ease with which to deny extras, and the ABSOLUTE lack of trying to push us into any warranties or anything..... the guy did stress the gap.... but otherwise, it was a straight sale. This made me want to trust him.... but deep down I was still thinking the whole while, "It hurts someone's pride to be "had" yes, but pride aside, I am too broke to be "had" !! LOL

I appreciate the advice about paying bi-weekly. I think that is really great advice. I also like the idea of over paying and then throwing a chunk at it in 6-12 months when we refinance it. thank you both again!

Nothing I should be fearful of from here, correct? I mean the dealer can't call me in 30 days and say, "ok, just kidding, now it is 24%" LOL please say no.

One last additional point, the 250 a month minimum is about 75 dollars less than we were spending on cigs. We quit 3 months ago, so I guess now we have set things up so that we most certainly CANNOT go back to that habit.... if nothing else, we can't afford it. LOL

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You would just bring the car back if that were the case, but I highly doubt they would do that to you. It actually sounds like a reasonable dealership.

[webhopper]

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@Mothership3 wrote:

Thank you both for replying!! you have helped me to feel a little bit better about it. I was so concerned that I was had.... that the financer w/ the dealership was told 13% and then he told us 17% or something. Honestly, I am not totally sure how anyone would ever find out if the financer is being honest or not. The whole deal, aside of the interest rate, was fair. The price of the car totally fair (in fact KBB says this car, this condition, would average 2-3k more nationally sold at dealership), the ease with which to deny extras, and the ABSOLUTE lack of trying to push us into any warranties or anything..... the guy did stress the gap.... but otherwise, it was a straight sale. This made me want to trust him.... but deep down I was still thinking the whole while, "It hurts someone's pride to be "had" yes, but pride aside, I am too broke to be "had" !! LOL

I appreciate the advice about paying bi-weekly. I think that is really great advice. I also like the idea of over paying and then throwing a chunk at it in 6-12 months when we refinance it. thank you both again!

Nothing I should be fearful of from here, correct? I mean the dealer can't call me in 30 days and say, "ok, just kidding, now it is 24%" LOL please say no.

One last additional point, the 250 a month minimum is about 75 dollars less than we were spending on cigs. We quit 3 months ago, so I guess now we have set things up so that we most certainly CANNOT go back to that habit.... if nothing else, we can't afford it. LOL

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I agree that GAP was a good choice for this purchase.  Also, feel good knowing they weren't trying to push you into things you didn't want or need.

By law they have to offer those products to either all customers or no customers... To avoid any potential discrimination claims... At least that's what the finance guy at my dealership told me, and I trust him, as I've bought three cars from them, all with a good experience, fair price, no pushy sales staff, no hidden fees or magic numbers showing up on the paperwork...  so that's why they probably went through those options with you.

[Project17]

I see people getting 25% rates all the time in states where its allowed. In fact for your state it could be the max so considering your situation your probably doing ok.

But to answer the real question are car dealers trying to rip you off for the most part yes. I have only come across one or two dealers that were ok. Most will lie and fudge what ever they have to for business especially once in the finance office.

[CreditJim]

I think you've got a fair rate. A high rate yes, but fair for your situation. I too was in the same situation 2 years ago. I absolutely needed a big, reliable car for my work. I had to put $12k down on a $32k brand new car because of poor credit and first time car buyer. Even putting that much down I still got hit with 18% interest. I refinanced with a credit union about 9 months later to 7.9%. A few months ago I made a one-off payment of $5k and then today I walked into the bank and paid the remaining $8k balance in cash, so I'm all paid up. I definitely paid well over the odds for this car, but at least now it's all paid off and still only 2 years old. Incidently I needed to buy a second car at the end of last year and my experience was vastly different to my first, thanks to these forums. I got pre-approved at the credit union I had my other car with, and asked the dealer to beat it. Ended up getting a certified used car with $0 down and 3% interest, so after the pain of this first purchase your next one will definitely be better