I have never had a car loan before, but the numbers don't seem to add up for me. It's not necessarily a BIG deal, as the loan isn't that much but I wanted to get some thoughts from MyFico friends...
I purchased a home in September of last year. My mortgage is $354/mo, I have 10 open lines of credit and when the dealer pulled my credit I was under 25% utilization (now under 10%, as I paid the cc's on Friday and went to dealership Saturday {was not planning on getting a car last weekend but I saw one I liked online and went for it}). My lowest score was a 665 EQ. My highest score was TU at 695.
I purchased a 2004 Honda Element EX. It is in excellent condition, carfax report had all service history by dealer, a very well taken care of vehicle... but had 120,700 miles. I paid asking of $8999, put $4000 down. With taxes and title, my loan is for roughly $6300.
I did this Saturday, so the banks were closed, but I was approved for financing and able to drive the car home. The rate I was quoted was 16% for a 48 month loan. Payments are about $189/mo. I also went with a warranty and GAP (due to high mileage, but gaskets, electrical, engine, etc included). At this rate and with warranty and GAP, my payments will be roughly $245/mo. I am able to do this with no issues, but again... the banks weren't open then.
I received a call from Wells Fargo yesterday to verify some information. They also hold my mortgage loan.
The only collections on my credit are 2 medical bills from 2007. Everything else is in good standing. 7 of my 10 credit accounts were just opened last month. I really think I'm good for a better interest rate, but, again, I have never had a car loan.
Is there anything I can do? Any advice? Suggestions? I am very very happy with the car, fine with the price, it fits my family perfect, and it's a Honda in excellent condition and should last at least to 200,000 miles with proper maintenance. I just want to know what my options are as far as getting a good rate and what I should be at. 16% seems high...
The rate does seem a bit high for your credit scores. Was the loan through Wells Fargo? It has been reported that some dealers will pad the interest rate a bit to make more money for themselves. This is one of the reasons that forum members generally advocate shopping a bit for a loan before you go to the dealership. That way you have an idea of what rate you should / can qualify for. But that is water under the bridge now in your case.
It could also be that because of the age and mileage on the vehicle as it sits that the loan was more difficult to sell and the bank demanded a higher rate to cover it. Because you put such a large down payment you may not be in a negative equity situation even with the extended warranty and gap coverage. Do you have any idea what the "book value" of the vehicle is? You may be able to shop around for a refinance even before you make payments. Perhaps if you have a relationship with a credit union or another bank you may check in with them.
I think your rate is too high at 16%, but yes it might be the age and mileage of the car. Probably because it was dealer financing. The last car I bought....my scores were only around 630 and I got 6% going to the bank.
Most banks do not like to finance a car more than 7 years old, but I would certainly go talk to your bank or CU and see if they can help you.
*8/10/13
Taxes and interest bumpped the price to 10k ish... But what do I do? Wells Fargo doesn't have the loan, they are just one bank that is considering financing me.
just got off the phone with Wells Fargo and they said 15.5 percent but I looked at the sales contract and it says 14.5 percent. I guess it went down because of the warranty.
I mean right now with the dealer financing is 14.5 percent...
DCU?