Bad car buying experience, need refinancing.

[Cleaningitup2016]

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.

[Anonymous]

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.

[Appleman]

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.

[Cleaningitup2016]

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.

[Cleaningitup2016]

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.

[Anonymous]

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.

[Cleaningitup2016]

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.

[Anonymous]

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

[Gidgetmom]

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@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.

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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.

[Anonymous]

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@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.

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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.