Pedatory Loan - Please help

[Mm587]

I am trying to help my daughter's friend.  She is only 19 and has a very thin credit file....i believe that her credit scores are around 675 (will find out for sure).  The problem is that 4 months ago her mother, who has horrible credit, cosigned a loan for her on a 2013 chevy cruz..  It was a 173000 loan.  after paying 4 months at 462.50 per month, exactly 300 has been taken off her principle.  I found her contract and it is with Santander Consumer Loan and the interest rate is 24.66.  Totally horrible...she has a 72 month loan on a 17300 car that she overpaid for that she will pay 33500 for.  she has one cc from comenety Victoria Secret which she has paid on time every time and she also has this 4 month old car loan that she has been on time every time.  Does anybody have any ideas to help her get out from under this crime?  thank you

[Anonymous]

Even if they are putting it to her pretty good make sure she pays the payment perfectly. I would say stick it out untill the 6th payment reports and optimize revovling util below 10% and refi at a C/U.

1. Make the payments, if her mother is responsible for making the payment, tell the girl to pay it if her mom does not.

2. Reduce util. on revolving account(s) to under 10%.

3. Dont app for anything!

4. Target a refi through a C/U or another auto finace company. I think you should wait until at least the 6th payment reports. A proper check of the credit is needed.

myFico has a special on score watch for 4.95 for the first month. That with Credit Sesame and Credit Karma should give you a great idea on her credit health and give insight on how/what to optimize her score for a refi soon!

Details on the car may play a effect on the value able to be refianced... Some banks/CU's will do 120% of retail so it gives some room

[Mm587]

Thank you very much!!!!

[StartingOver10]

Your daughters friend will need to put away as much cash as possible. It is likely that she is further underwater than the 120% will cover - so she may need to bring cash to the refi. Naturally the only way to know is for her to find out how much the credit union will refi the vehicle.

[SamsungHDTV]

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@StartingOver10 wrote:

Your daughters friend will need to put away as much cash as possible. It is likely that she is further underwater than the 120% will cover - so she may need to bring cash to the refi. Naturally the only way to know is for her to find out how much the credit union will refi the vehicle.

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This right here. The biggest concern is that she WILL be upside down on the loan and the LTV will exceed 120%. So will very likely need cash to the refinance. If they accepted such terrible loan terms without knowing the rate, she probably got really ripped on the sale price of the vehicle as well.

Although solid advice here, the only different thing I would recommend is that I would instead pay any extra cash straight to principle as soon as I had the cash. This will save you interest charges equal to the interest rate multiplied the cash you applied to principle multiplied by the time period until you plan to refinance. Which likely isn't too much, but savings is savings.

Even if she cannot get the loan caught up any time soon, imagine earning X amount (amount you applied to principle each month) in a savings account that is earning 24%.

[DeadlyPersona]

dsmer is correct and that advice is something I learned from a car salesman.  Tell her to make payments on time and after she pays the 6th payment get with a Credit Union to do a refinancing.  She should actually start researching local credit unions now.

[Anonymous]

She should start banking at a credit union now. CU look mroe favorable on existing customers than brand new customers. Also concur with the wait for 6 months payments to show up to refinance.

Educate her -- not only on w hat she did wrong with this contract, btu where and how to find information in the future. She will ahev more than this one laon in ehr life to deal with...

Start by making her post here. Her askign for help. Her and you going to the CU with ehr leadign the conversation. Prep her beforehand. Help her if she gets into trouble but make her do it.

[Mm587]

All great advice....she is young and her parents dont really have a clue.  This is  pretty much what I thought, but I figured it would not hurt to ask if I was missing something.  Thank you all for the help!!

[dobirdsmommy]

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@Anonymous wrote:

Even if they are putting it to her pretty good make sure she pays the payment perfectly. I would say stick it out untill the 6th payment reports and optimize revovling util below 10% and refi at a C/U.

1. Make the payments, if her mother is responsible for making the payment, tell the girl to pay it if her mom does not.

2. Reduce util. on revolving account(s) to under 10%.

3. Dont app for anything!

4. Target a refi through a C/U or another auto finace company. I think you should wait until at least the 6th payment reports. A proper check of the credit is needed.

myFico has a special on score watch for 4.95 for the first month. That with Credit Sesame and Credit Karma should give you a great idea on her credit health and give insight on how/what to optimize her score for a refi soon!

Details on the car may play a effect on the value able to be refianced... Some banks/CU's will do 120% of retail so it gives some room

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Santander  is a starter loan. I had them for 3.1 years until I was finally able to say goodbye.   I had negative equity in my 2009 Nissan Versa. If I kept going I would have paid 27k for that car.  I had to fork out the negative equity around 4800 to trade it in.  Its tough. They take chances on no credit/bad credit consumers.  I agree with the other posters start to sock away money and switch to a CU.

[Anonymous]

Make sure to update us on how everything works out!!!! Also, if you reply with some specifics about her car (yr, make, model, trim, milage, options) we can figure out aprox what she could get for it on a refi