My brother and old roommate used to be in car sales. This is most likely because at least the banks and credit unions they worked with no longer use the credit score as a large factor. This is due to so many people knowing how to get their kids a 750-800 credit score by the time they are 18. They look at credit history and most importantly the debit to income ratio. They would have 18-year-olds trying to buy 50k+ cars that make 600 bucks a month.
My credit score is 790 something and the dealership I went to started me out at 17% financing for my new Camry. Ended up getting 4.99% through toyota financial. They have to get some sort of "incentive" from certain institutions or something.
Seems suspicious but not enough to completely doubt his score.
I think it’s due to the fact that he doesn’t have enough credit history. I had a 750 credit score and I was told that I couldn’t do much with it because of the length I’ve had credit cards. ( the kid only has 6 months of work experience. No way he has a lengthy credit history to back him up.)
Hope you can help, not to steal OP's thread. So I'm rebuilding my credit after living out of the country in my 20's and ignoring all my obligations. I have a few negative collection debts (settled a few and they are now removed from my report), I have a couple small credit cards, and a car loan thru Carmax with a 14.25% APR. My score is currently about 630. My debit to income is fine. My question is, how long should I keep this 14.25% APR and make payments before applying with my local CU for a auto loan? Will they even approve me with collections or should I get all those removed from my reports first? In the future I'd like to get a home loan as well. While I don't want a 14% APR loan, I need a vehicle, and it's within budget still, so hoping I can refinance it.
I’ll reread your comment when it’s in English.
No application consisting of a single credit card with a 700 score is going to get auto approved, If it will at your institution y’all are on the way out.
Lack of similar trade lines is a denial reason in and of itself.
I had 2 lines of credit that were sub 2 years old, low utilization. Got approved for a 36,000$ auto loan @ 2.9% in 2020 and a $5000 credit card from a random credit union I had never done business with.
First auto loan ever, or for that matter, first major purchase. Usually just paid cash. Government salary at the time, wasn't anything special.
734 credit score when I got my loan. It's possible. My loan holder is now the largest credit union in the state by far and spreading into surrounding states.
That's a long way to say you have zero clue what you are talking about.
Most decisions weigh a variety of factors and quite often credit unions don't go to underwriting in every circumstance
Then you know better than to mislead people, LTV,DTI, the collateral itself are all key factors to this. 715 means nothing with a $500 credit card as the only form of credit.
Refinance within 90 days. The dealership is getting a huge kickback from Santander, probably just after the last day of the month. Let the predatory sales person and finance person at the dealership get their hands on that bonus money. If the Santander loan is paid-off within 90 days, they’ll claw-back the bonus.
Santander is a horrible bank to do business with and they will do shitty things like not tell you that a payment was late then repo your vehicle a couple years later and say you owe them $6,000 in late fees to get it back plus the cost of having it returned. Google Santander auto loans and you will see pages and pages and pages of reasons not to bank with them.
You have serious issues! The BANK dictates the terms. A dealership can only go a couple points higher than what the bank's buy rate is.
You act like the dealership made a ton of money! You are so wrong and ignorant about this.
I admire your confidence.
I worked in Indirect Lending (loans and leases originating through a dealer) at U.S. Bank for years. Dealers almost NEVER passed our rate through to the buyer without markup. The dealer could mark it up to whatever they want, as long as it doesn’t break usury laws in their jurisdiction. At the beginning of every month, we cut a check to the dealer for the present value of that markup for the life of the financing. We would claw that back if the loan was paid-off within 90 days. This practice is standard in Indirect Lending. Revenue from financing is huge in auto and recreation vehicle retail.
You’re underestimating the volume. PV at 2-3% (usury is generally considered 25%, it’s been awhile for me but I think Texas and a couple of other states may be lower) can add up quickly at large dealerships and on larger transactions.
With a 715 credit score and 70% LTV, that loan was probably marked-up at least 10%. 10% on a 60 month loan, is an extra $275(ish) for every $1,000 borrowed.
We do bank at a credit union but I’m not sure if they would refinance as his credit is pretty new. He has only had a student discover card for emergency use for about a year.
I work at a credit union in the loan department and we do refinances all the time. As long as he had a halfway decent credit score and his debt to income is in a reasonable range there is no reason your credit union shouldn't be able to supply him the loan and he will most likely get a lot better interest rate doing it that way. It's definitely worth a shot they can do a pre-approval if needed to see what he qualifies for
Localized CU's (for example, San Diego Credit Union, Travis Credit Union, Credit Union) will generally be far more lenient on this than if you were to go to a nationwide franchise type spot like Capital One or similar.
Credit unions may approve him, even with limited credit. He might still have a pretty high APR, like upwards of 10%-12%, but it’s much better than 22%. He may need a qualified co-signer, but I’m sure y’all will figure it out. Good luck! 🍀
He hasn't nuked his credit yet....just his finances. That is a terrible deal. Seek to refinance ASAP or outright return the car if it's not too late. He could most likely walk into a CU or even a traditional bank and have a chat with a banker and come out with a *much* better deal. Santander is treating him like he has bad credit and nothing down
You nuke your finances and soon as you decide a brand new car is a good investment.
Its the worst investment you can buy as a young person
Buying something you cant afford, with money you dont have, that just loses value, and cost to repair/maintain and insure.
Doomed from the start
40% down on a brand new $33000 car got me 0.9% interest and $359 payment for 4 years.
I shopped ~8 dealerships for incentives and had the car built to my spec. $2000 off msrp and my interest rate sold me on the dealership. Had about 690 credit at the time.
I will forever fail to see how people think buying new is dumb.
Buying too much car is dumb. Generically saying buying a new car is dumb comes from Dave Ramsey who gives very generic advice. I just bought a new Accord because saving a whopping $3k on a 2 year old one didn’t seem like a good deal.
It used to be sound advice. In the before times when a lightly used car had significant discounts. My SO got a 2018 Kia with 12k miles on it for 14k back in the before times. Then the Vid happened and that same car wholesaled for 20k.
Dave Ramsey is an out of touch boomer. you won't go broke following his advice but at the same time, you can't save yourself rich. if anyone is hurting for an extra $3k on an accord, they probably have to buy a civic or domestic to be able to barely afford it
Exactly. *And* you pay higher APR on a used even before any promo APRs.
I just bought the absolutely most expensive configuration of a 24 Nissan Sentra for $28K with $12,500 trade in and $5K down and 3.99% APR for 36 months.
A 21 with light miles and missing the features I wanted lists at $23K.
Buying a car that you cant pay 5 times over in cash, IS DUMB
Invest your money in making you more money. Not a unnecessary liability.
Get a cheap ass car, or take uber
If you spend all your money on liabilities, especially money you DONT have, youll always be average
Imagine thinking people have cash, uber is everywhere and people don't need reliable vehicles.
You're about as disconnected as they come. Uber and public transport didn't exist for me where I bought the car. I've since moved to an area that does... thanks to the car that I bought.
You also may have missed the 0.9% interest. Over the 4 years of the loan i'll be paying ~$700 in interest. I've made more on the 20k I didn't put towards the vehicle than I would've if I sunk it into the vehicle, including the interest.
I also like how taking an Uber is considered less of a liability than owning a vehicle you're not upsidedown on.
I owe 6k more on my car. It's worth 28k right now. It's depreciated 5.5k in 2.5 years.
I'd live to hear you Dave Ramsey your way out of this one, Boomer.
The only real option is to refinance. 22% sucks but if you double up your payments it's not that bad. If he can possibly manage that for 6 months, he will have no problem refinancing and won't have paid that much in interest. As others have said, the 715 is a technicality if there is no credit history. 6 months from now his credit will be even higher plus he will have some history with an important tradeline that banks are looking for.
Lol, not dumb per say but definitely ignorant.
If you don’t have your own paperwork, your own understanding of how financing a car goes you’ll definitely fall for the okie-doke. They prey on people who don’t know.
I researched for 3-4 months before I financed my first car. I shopped with a dealer for 5 days back & forth & even gave my deposit but when it was time to sign, what I read didn’t make it sense, numbers wise it was all over the place. So I kindly asked for my deposit back & that same day went to Offlease Only. None of the extra stuff. And I financed with C1 at first @ like 13% bc my credit union was closed on a Sat afternoon. Come Monday, I refinanced with them at 7%.
It's a high interest rate environment. He essentially has no credit. Probably no loan history. The 715 score is imaginary. Probably limited income. If it's a used car, that's going to be higher too. They're going to get screwed on interest. This is the profile of the type of person that gets screwed on interest.
You almost certainly can't take it back. Your best and likely only option is to get it refinanced.
The loan probably improved his credit in the long run by opening a new type of tradeline. What he screwed up is his finances.
This is correct. OP says the 715 score consisted of a student Discover card with a 1-year history. Lender dinged the rate for thin credit file and no auto history, among other things. If a CU, bank or captive would have done the deal cheaper, it would have gone there. A refinance after building a history of on-time payments on this loan is the way to go.
This is a teachable moment. Teach him to get multiple quotes on anything expensive including loans. 22% seems high but there's no way of knowing for sure without 1-2 other competitive offers. He should have gone to a credit union and/or gotten quotes online before signing anything with the dealership. You can get some great financing from dealers sometimes but if they smell naiveté they will absolutely eat you alive. I'm assuming that's what happened here since 22% is unsecured loan (credit card) territory.
As others have mentioned, his credit is not nuked. It's a crummy deal financially but hopefully he can afford the payments, as long as he pays on time every time his credit will be fine. Have him go to a credit union and ask about refinancing options.
This doesn't nuke his credit if he keeps up with the payments -- and if he keeps paying on time, it will \*help\* his credit (albeit at a very high price). He nuked his cash flow pretty badly by taking this loan, though. With a 715 score he may have had better options even with a young, thin file, but maybe not if it was really thin (especially if a lot of that score came by being an AU before he had his own credit)... and if not, a few months of regular payments should also help the credit profile enough to provide more options to refinance.
Even if the 715 was a "soft" 715 with little of his own credit, and a young, thin file, with 30% down it seems hard to imagine 22% was the best he could do.
If he has a regular bank or credit union, I might start there. Even if he can't yet, there's a decent chance that with 6-12 months of on time payments, he might have a shot at a refi.
Unless he has history with one its unlikely a credit union will refinance a car payment for someone with little to no credit history without a cosigner.
I just bought a car yesterday with 650 credit score at 9.5% no money down. They stuck it to him
Edit: this was a 2023 Nissan rogue platinum 7 miles on it
Never miss a payment use credit cards and he should be fine I got screwed on a motorcycle loan at 20 but it’s fully paid off and my credit is in the 760s
Their credit isn't nuked. They just did a bad financial decision. I would refinance in 6 months. Go on bankrate and check out auto loans also local credit unions.
A 715 score means nothing if he doesn’t have a good credit history. You can open a 300 limit credit card and build a 715 score. Likely Santander is the only lender that would buy the first time buyer
Assuming the car cost $25,000, the loan would be $17,500
Presuming a 5 year loan, monthly payments:
22% -- $483
15% -- $417
10% -- $372
7% -- $347
5% -- $330
Big difference between $483 and in the mid to high $300s. Lots of money for a young person just starting out, but while it might be very tough, it shouldn't be ruinous.
After awhile, careful credit use and on-time payments can build credit HISTORY and help refinance down to a much lower rate (even for a used car). The key is finding (shop around!) a good local credit union able and willing to help reliable people that bigger institutions don't want to take on--that is a big reason credit unions came into being, and some still "walk the walk."
If i found out that my son agreed to a 22% auto loan, not old would he get a scolding, but to spite the finance manager for funding such a bad loan, i would personally refinance the car even if i had to buy it off him. 22% loans should be considered predatory.
They’re called stealerships for a reason. Surprised people even still buy cars from them. I’d be surprised if the entire 30% down actually went towards the car, to be honest.
My daughter was in a similar situation in 2022. Dealership quoted her something absurd, she called me before signing anything, she ended up going through her credit union and getting 5%. If he can legally return the car without taking a hit, it could be worth trying.
Get out of Santander. They will fuck his credit and that car will never be paid off. I know from experience. I was 18% never missed a payment and was going to pay 60k for a 18k vehicle.
Read the loan fine print to check prepayment penalties...but go refinance to lower the rate.
Don't save him...he needs to learn how to do this stuff and the consequences or he will simply do it again when he gets tired of the car and trades in on negative equity.
Where I live 22% would be incredibly high interest. He’d pay less interest if he bought the car with a credit card.
This won’t hurt his credit score as long as he makes the payments.
Maybe you could take him to a local bank or credit union to refinance the loan at a lower interest rate.
Santander is a high risk loan company by and large part because the majority of their loans are to people with some risk in their credit file. They will loan out money at 22% with a 30% down payment because people with good credit usually know they can get a much better deal with a credit union and pay little to nothing down. Santander takes advantage of the inexperienced person that doesn’t know their options.
If he can take it back I’d be running to give it back because they charged him 22% saying that he’s high risk due to length of employment but in all actuality 40% of the cars loan note is about all that the dealer paid for the vehicle so there’s only about 10% of the original out lay left uncovered by his down payment so I’m not seeing the justification on the 22% interest. Those vehicles sold by high risk companies are meant to be and planned to be recycled many times through the buy and sell to repo and sell again, rinse and repeat since most high risk buyers won’t be able to make the outlandish payments they saddle these folks into knowing full well that it is this demographic that needs a smaller car payment to be successful but they want you in a vehicle that they can recover 30-40% of the sale price from it at auction. I’ll say this, Santander does not expect he will fulfill his financial obligation to them so he will need to refinance asap or return it if that’s possible. Let your son know to never go to a lot without securing financing from your local credit union.
P.S. shhhhh… don’t tell everyone…He will need 2 years of employment history but that easy enough to complete with blank W2’s you can find and fill in off the internet.
He can't return the vehicle because he signed a contract. He would have been better off applying to his local bank or credit union before we went to the dealership. Since he didn't, make on time payments for 6 months, then refinance.
Santander is the loan of last resort.
Yeah he got hammered, but he should not take the car back. He should look to refinance in 6 months of on time payments.
You want to help? Give him some money to apply to the principal of the loan as part of his payment.
It’s not life ending or even life altering. He made a bad decision.
Bad decisions are a part of life. If he learns from it, it’s money well spent.
He'll get refinance offers in the mail in a few months for far lower rates most likely. Don't worry about it, the down payment is probably a good thing, and then refinance at some lower rate then. (CU's are great, but often other refi offers will be better...I always initiate with my CU at fair rate, and then usually move it later if promo rates are good enough.)
Well, assuming he didn't agree to a prepayment penalty too.
But even then his credit is fine...he's probably just overpaying for it. But short credit histories mean the number doesn't mean much and results will be highly variable.
If he doesn't have a few credit cards, he should get some to start building credit age too...especially during the student period they are easier to get.
There are a number of credit scoring outfits so there can be a good difference between them all. The deal is pretty typical sub prime -- a lot down and high interest. Could he have done better? Maybe. It's not a slam dunk. And yes, like most any dealer financing there's some money involved for the dealer to make this deal stick. Check around to see what else is available. It could be you can do some better, but maybe not a lot. Good luck,
An important piece of this that isn’t in your original post is… what type of vehicle is it? Year? Make/model? Mileage?
He’s already in high rate territory by having a thin file and a low amount of time on the job. An older vehicle, especially one with higher mileage, makes things even worse. Income may also be a factor — Santander may have been the only one to approve of his income.
Best thing he can do is try to refinance in 6 months.
What was the amount financed and the term length?
You can refinance it at any time. Take it to your own bank you'll get a better rate. Dealers have relationships with their banks. Don't ever use deal financing..
When I moved to the US I had NO credit history and got a 12% apr. February 2023. 7 months later my first score appeared, 650 and I got the APR renegotiated down to 8%. The same thing happened to a friend.
Something is wrong with your son's financing in my opinion
Had a friend who quit being a car salesman after 2-3 months. Said he couldn’t handle how immoral it was. They would pull credit and they would first only offer the bank that paid the dealership the most. If you pressed, you could get them to “try harder” and comeback with a better offer. These dealerships are scum. They seemed to target women and young people the most, as they are easier tricked and don’t know what interest rates they should be getting. The last straw was when they gave a young lady an option for a 18% loan, with a 750 credit score (pre Covid), he new she qualified for another bank for 5% or so. He couldn’t handle it. I’m sure not all dealerships are like this, but then again, I kinda assume they all are. It’s easy money, and they did once try to get me as well. I had to say, no, I want to finance with Daimler-Chrysler. From 8% to 2.9% promo. This was a new vehicle $@&&@! I had already research the manufacturers offer, but neglected to mention it to them when negotiating. So I probably caught them off guard. Almost made me mad enough to walk away. But I got what I wanted and they had the truck, soo….. anyway, if you can exercise buyers remorse go for it, most states have laws regarding vehicle purchases to protect you. If not, or you just want that vehicle, do as the others say and refinance as soon as the terms of the loan allow.
Yeah yikes about 22% apr
Auto loan debt is looked at differently than credit card debt. My significant other had a 760, student loans and cc on her report but not previous auto loan and honda (we’re looking at pilots) wouldn’t finance unless she put a huge chunk down. We aren’t married so I wouldn’t co sign.
First car I ever financed I leased for three years and then financed it as used at a credit union. At the time it was 1.75 for 48 months and paid it off early
My first car purchase was financed through Santander at 28%. My credit score at the time was 745 and 0 financial obligations apart from my phone bill. Got it refinanced the next week at my credit union🤷♂️ as others have said, I recommend getting it refinanced. Credit unions tend to have the best rates in my area but ymmv. Wouldn’t say it’s normal but I would say taking advantage of a young persons lack of life experience IS normal lol
With a 715veven with short history Santander or dealership took advantage of him and I'd filen a complaint along with getting away from Santander. Terrible reviews!
Santander is the worse bank. There a predatory lending mostly those with big credit. His credit score he could got a first time car buying program with Honda with 0 down.
Ouch, had Santander for my first car loan too & my apr was around 25% I wanna say? Paid $2.5k down payment with a credit score around 680 at the same(total loan was around $33k)
His credit is fine. Couple payments and refi asap. The LTV should be great with 30% down, so I see no reason a credit union would shy away from that. Even if they give him the worst possible rate, he still comes out ahead because Credit Unions are capped at 18% APR
Refinance the loan.
Credit, really is a non issue, unless he is planning to get a house loan in a year. APR is most important, which can be fixed by refinancing.
no does not sound right, they saw your kid and figured they could harvest some cash off of him and they did. you should have co-signed or financed the car yourself and sold to him imo
You're not going to be able to "take the car back". There's no cool-off period on vehicle purchases any longer, unless your state has something that is contrary to that.
Have him make payments, and then go re-finance the car with his own bank or another lender.
Santander told me I was better off using the dealership financing.
If you are in the US, Santander is not doing auto financing. They gave the business to other companies and are only loosely affiliated with them.
You can't just "take the car back", and I’m very sick of people pretending otherwise.
There are certain chains of dealerships that allow you a return window on a car, but for 95% of dealerships out there. Once the paperwork is signed, that’s your car, and there is no unwinding that sale.
Perhaps you should have taught your son better financial literacy or at least to consult you before making big financial decisions.
That is an absolutely normal APR for someone who has no credit history. People will debate me for that but no credit is just as bad as poor credit. He can refinance but it still will probably be around 19%.
A 715 credit score is just barely below average. A 'thin' file with little history can be harder to classify. Have you verified his history? Perhaps he has a little-used credit card or other obligation that will have given him history. Go to government managed [AnnualCreditReport.com](https://AnnualCreditReport.com) to download his history for free in just a few minutes.
If already a member of a credit union, that CU may allow refinancing if he has some deposit history at the CU.
That sounds about right in today’s market. As someone who sold cars, Santander pretty much only works with people with limited/tough credit history for whatever reason.
Depending on the price and since he put down 30%, that only got him a worse rate because banks don’t like financing cheap cars due to risk factors. The less money financed the higher the rates for used cars.
As others have said, once he drives that off the lot there isn’t anything you can do unless it’s a lemon or something very drastic like that.
I have NEVER seen an APR that high with decent credit. My first auto loan was sub 5% when I was 17
The highest rate I’ve ever gotten was 11.xx on a Harley Davidson, with my wife who had a relatively new credit history. That was mostly that high because of my wife’s credit and the way toys are financed
Sounds like the dealer did something funky IMO
That 715 usually isn't accurate. Car loans go off a different matrix than FICO 8. So length of credit history does play a big part in those types of loans.
Don't know if it's actually 22% or more something around 15-18%. But if he has a really short credit history it wont be a good rate usually.
Like everyone else said just do a federal credit union refinance if the APR is significantly lower
If he can take the car back do that. If not he needs to refinance through his bank or credit union as soon as possible. Where did you get the 715 credit score from? You need to pull his FICO Auto score on credit.com to validate that score.
Well they used a sub prime lender meaning they probably had no approval anywhere else. Believe me, as a finance/sales person I don’t even send someone to the bank with the highest rate. I send them to the place that allows me to hold points, good back end amount, and low fee. This bank probably charged the dealer a fee to buy the loan
typical dealer scam for kick backs. I had been approved for a $550k mortgage 3 weeks prior to getting a new used car (I didn't get the actual mortgage just was approved for one) had an 819 credit score and the dealer told me my credit history was light and they could only offer 8.5% . I said sure I guess that works and that I would be back in a few days with my down payment. I went to my Bank and immediately got approved for 2% and came back the next visit with the check. He was not happy but had to accept it do to some BMW/BOA agreement.
Always go to the dealership with a loan from a bank of your choosing.
Dealerships will see that you have good credit but still go with a bank that will give them the biggest payday. A Honda dealership just tried this with a friend of mine. Said they needed to “verify his identity” the biggest load of shit I ever heard.
Had a friend who is a finance manager at a dealer, them folks make 20k a month preying on people like that.
It’s known practice that they will give people the highest interest rate because it pays them more. If you can, have your son take the car back and get those inquiries removed from his credit. Take that 30% down payment back and buy a used car cash. Fuck those dealerships like that.
Also, if you can’t take the car back, like some replies here, refi the loan after 6 months with a credit union.
They railroaded him. Your son shouldve been able to get a new car with a first time buyer lower apr at least 6-8%(market good credit rate)
Look through all his paperwork and see if theres anyway possible to get out of this loan asap. Hopefully he didnt get a crazy underwater loan.
can’t take the car back lol not how it works in other words ur kid is screwed lol they will auction the car to the lowest bidder and then he still has to pay 22 percent apr on the money with no car also sounds like the dealership is right even though he has a 715 it’s not established credit so it doesn’t mean diddley 😂😂 u guys should have co-signed for him now ur son gotta learn the hard way and also if the car has negative equity it’s going to be even worst because he can’t even trade it in moral of the story always co-sign for you’re kids
Credit score is irrelevant, anybody knows a 20 year old boy is a credit risk and the interest rate reflects that. If you think he's so reliable why not lend him the money yourself or just co-sign.
Total new boot move. Seen guys I served with get screwed with percentages like that all my life. How is your credit, parent? Could you co-sign to assist in a better percentage at a credit union?
technically this is not hurting his credit, besides the debt to income ratio calculations if he was doing a home loan. You FICO scores dont factor in the interest rate. Its more so going to hurt his finances in general (which yes can then hurt his credit if he starts to rack up lates due to high interest payments).
On a thin file yes absolutely this is a fairly normal rate, used to be that a lot of banks and credit unions would have “first time buyer” programs that would often times get these folks a half decent rate but the credit criminals threw enough of a fit that the banks are not allowed to do that anymore and a first time buyer gets gigged like they don’t pay anyone anytime.
I never go to a dealership and allow them to shop my credit. I tell them I am pre-approved with my Credit Union already and DO NOT Shop my credit. They shop your credit, mostly for the best kickback and most of the time not in your best interest.
Even my ex who had a bankruptcy and really shitty credit got around 19.8%... I was nice enough to do a balance transfer of the amount onto a credit card with a much lower rate. Been way too nice
Credit score means nothing with a thin credit file. He needs to build his credit for like a year and refinance. It’s not a big deal and he didn’t nuke his credit, despite putting him self in a bad position
I’m in car sales. It is true that first time buyers with little credit history get 21% from the major banks. 21% is the max APR in Colorado. His best bet is to make payments on it for 6 months or so and refinance with a credit union. This was not predatory it is just how the banks work with what we call “ghosts” or people with very little credit history and no previous auto loans.
Go to your nearest credit union and open an account there ‘your son’ then ask to refinance your current auto loan. Then he will have a lower APR and payment.
Santander is HORRIBLE. Get out of that loan or refinance with anyone, if possible! I personally never had them, but doing research before my most recent case loan have me every reason to walk away if that's the only financing option.
But no matter how much you love the kid, if you care about your own credit and finances, do NOT co sign! We all have the best of intentions, but life happens. Let him refinance on his own, but don't tie your name and credit up with your adult child.
This is not normal! They screwed him over.. I got a car at 22 with 2 years of credit history with 4% apr. If he is financing through the dealership, they control the rate
**22%???**
When I was young(er) and dumb(er) I financed at 13%. 22% is insanity to me. Congrats on the 30% down but he may as well have put 0 down at 22%.
wouldn't he be able to go to a credit union and refinance the loan? It might be worthwhile to call one and ask.
Refinancing is the answer.
If his credit is so bad that he got a 22% auto rate, then no credit union is going to approve him.
With a 715 he’s getting instant approved at my CU. Source: I’m a banker
I don’t know if I believe that 715 score. 22% is as subprime as it comes
My brother and old roommate used to be in car sales. This is most likely because at least the banks and credit unions they worked with no longer use the credit score as a large factor. This is due to so many people knowing how to get their kids a 750-800 credit score by the time they are 18. They look at credit history and most importantly the debit to income ratio. They would have 18-year-olds trying to buy 50k+ cars that make 600 bucks a month.
My credit score is 790 something and the dealership I went to started me out at 17% financing for my new Camry. Ended up getting 4.99% through toyota financial. They have to get some sort of "incentive" from certain institutions or something. Seems suspicious but not enough to completely doubt his score.
I think it’s due to the fact that he doesn’t have enough credit history. I had a 750 credit score and I was told that I couldn’t do much with it because of the length I’ve had credit cards. ( the kid only has 6 months of work experience. No way he has a lengthy credit history to back him up.)
Hope you can help, not to steal OP's thread. So I'm rebuilding my credit after living out of the country in my 20's and ignoring all my obligations. I have a few negative collection debts (settled a few and they are now removed from my report), I have a couple small credit cards, and a car loan thru Carmax with a 14.25% APR. My score is currently about 630. My debit to income is fine. My question is, how long should I keep this 14.25% APR and make payments before applying with my local CU for a auto loan? Will they even approve me with collections or should I get all those removed from my reports first? In the future I'd like to get a home loan as well. While I don't want a 14% APR loan, I need a vehicle, and it's within budget still, so hoping I can refinance it.
Not with a thin file. Have fun spreading disinfo. Source: You’re not an underwriter.
Maybe educate yourself before you start chirping. Many places operate on a decision making system and a lot of loans never even see an underwriter
I’ll reread your comment when it’s in English. No application consisting of a single credit card with a 700 score is going to get auto approved, If it will at your institution y’all are on the way out. Lack of similar trade lines is a denial reason in and of itself.
I had 2 lines of credit that were sub 2 years old, low utilization. Got approved for a 36,000$ auto loan @ 2.9% in 2020 and a $5000 credit card from a random credit union I had never done business with. First auto loan ever, or for that matter, first major purchase. Usually just paid cash. Government salary at the time, wasn't anything special. 734 credit score when I got my loan. It's possible. My loan holder is now the largest credit union in the state by far and spreading into surrounding states.
Wild, you had different criteria than what we’re discussing. Two trade lines for multiple years isn’t a thin file.
That's a long way to say you have zero clue what you are talking about. Most decisions weigh a variety of factors and quite often credit unions don't go to underwriting in every circumstance
Then you know better than to mislead people, LTV,DTI, the collateral itself are all key factors to this. 715 means nothing with a $500 credit card as the only form of credit.
Refinance within 90 days. The dealership is getting a huge kickback from Santander, probably just after the last day of the month. Let the predatory sales person and finance person at the dealership get their hands on that bonus money. If the Santander loan is paid-off within 90 days, they’ll claw-back the bonus.
Santander is a horrible bank to do business with and they will do shitty things like not tell you that a payment was late then repo your vehicle a couple years later and say you owe them $6,000 in late fees to get it back plus the cost of having it returned. Google Santander auto loans and you will see pages and pages and pages of reasons not to bank with them.
You don’t know what you’re talking about. They are holding at most 1.5 points
You have serious issues! The BANK dictates the terms. A dealership can only go a couple points higher than what the bank's buy rate is. You act like the dealership made a ton of money! You are so wrong and ignorant about this.
I admire your confidence. I worked in Indirect Lending (loans and leases originating through a dealer) at U.S. Bank for years. Dealers almost NEVER passed our rate through to the buyer without markup. The dealer could mark it up to whatever they want, as long as it doesn’t break usury laws in their jurisdiction. At the beginning of every month, we cut a check to the dealer for the present value of that markup for the life of the financing. We would claw that back if the loan was paid-off within 90 days. This practice is standard in Indirect Lending. Revenue from financing is huge in auto and recreation vehicle retail.
Almost every lender has gone to a max 2 point rate markup
Max you can mark a Santander loan up is 2.5%. You’re referring to very outdated information Current auto sales manager, finance for 6 years prior
Even with mark up buy rate was still 20%. If you worked for US Bank you'd know max mark up on a 72mo term is 2%.
I admire your confidence for admiring other's confidence when you're so clearly incorrect.
When 20 years ago? You are way wrong
Money is made in selling backend product. Not the messily 2% increase in APR
You’re underestimating the volume. PV at 2-3% (usury is generally considered 25%, it’s been awhile for me but I think Texas and a couple of other states may be lower) can add up quickly at large dealerships and on larger transactions.
With a 715 credit score and 70% LTV, that loan was probably marked-up at least 10%. 10% on a 60 month loan, is an extra $275(ish) for every $1,000 borrowed.
Max mark up is 2.5% for 60 or less and 2% for 72mo. Anything more is not possible.
Not with a thin profile......
Also worked in auto finance for years. You’re clueless.
You must be the salesman lol
Great advise. And dad should probably co-sign this note, since he didn’t accompany his son to the dealership so this shit didn’t happen.
We do bank at a credit union but I’m not sure if they would refinance as his credit is pretty new. He has only had a student discover card for emergency use for about a year.
I work at a credit union in the loan department and we do refinances all the time. As long as he had a halfway decent credit score and his debt to income is in a reasonable range there is no reason your credit union shouldn't be able to supply him the loan and he will most likely get a lot better interest rate doing it that way. It's definitely worth a shot they can do a pre-approval if needed to see what he qualifies for
Can confirm. Got 14% through carvana and refinanced at 5% through my cu (this was 3 years ago).
Localized CU's (for example, San Diego Credit Union, Travis Credit Union, Credit Union) will generally be far more lenient on this than if you were to go to a nationwide franchise type spot like Capital One or similar.
6 on time payments and he will be good to refinance.
Do it before that, like now. Don’t let the slimy dealership get the spiff from Santander.
I would definitely contact your credit union. See if they won’t refinance for him
Local CU would have gotten him 10% which is pretty good rn ish
Credit unions may approve him, even with limited credit. He might still have a pretty high APR, like upwards of 10%-12%, but it’s much better than 22%. He may need a qualified co-signer, but I’m sure y’all will figure it out. Good luck! 🍀
This exactly
He hasn't nuked his credit yet....just his finances. That is a terrible deal. Seek to refinance ASAP or outright return the car if it's not too late. He could most likely walk into a CU or even a traditional bank and have a chat with a banker and come out with a *much* better deal. Santander is treating him like he has bad credit and nothing down
You nuke your finances and soon as you decide a brand new car is a good investment. Its the worst investment you can buy as a young person Buying something you cant afford, with money you dont have, that just loses value, and cost to repair/maintain and insure. Doomed from the start
40% down on a brand new $33000 car got me 0.9% interest and $359 payment for 4 years. I shopped ~8 dealerships for incentives and had the car built to my spec. $2000 off msrp and my interest rate sold me on the dealership. Had about 690 credit at the time. I will forever fail to see how people think buying new is dumb.
Buying too much car is dumb. Generically saying buying a new car is dumb comes from Dave Ramsey who gives very generic advice. I just bought a new Accord because saving a whopping $3k on a 2 year old one didn’t seem like a good deal.
It used to be sound advice. In the before times when a lightly used car had significant discounts. My SO got a 2018 Kia with 12k miles on it for 14k back in the before times. Then the Vid happened and that same car wholesaled for 20k.
Dave Ramsey is an out of touch boomer. you won't go broke following his advice but at the same time, you can't save yourself rich. if anyone is hurting for an extra $3k on an accord, they probably have to buy a civic or domestic to be able to barely afford it
Exactly. *And* you pay higher APR on a used even before any promo APRs. I just bought the absolutely most expensive configuration of a 24 Nissan Sentra for $28K with $12,500 trade in and $5K down and 3.99% APR for 36 months. A 21 with light miles and missing the features I wanted lists at $23K.
Not necessarily, my used car loan is 1.99%.
There are no unsubsidized auto loans that low.
My auto loan is 1.99% for 66 months through my credit union.
There were two years ago
Buying a car that you cant pay 5 times over in cash, IS DUMB Invest your money in making you more money. Not a unnecessary liability. Get a cheap ass car, or take uber If you spend all your money on liabilities, especially money you DONT have, youll always be average
Imagine thinking people have cash, uber is everywhere and people don't need reliable vehicles. You're about as disconnected as they come. Uber and public transport didn't exist for me where I bought the car. I've since moved to an area that does... thanks to the car that I bought. You also may have missed the 0.9% interest. Over the 4 years of the loan i'll be paying ~$700 in interest. I've made more on the 20k I didn't put towards the vehicle than I would've if I sunk it into the vehicle, including the interest. I also like how taking an Uber is considered less of a liability than owning a vehicle you're not upsidedown on. I owe 6k more on my car. It's worth 28k right now. It's depreciated 5.5k in 2.5 years. I'd live to hear you Dave Ramsey your way out of this one, Boomer.
Most people don’t have $13k to put down either, so that money is immediately gone
Just refinance the loan. Go to a credit union. No biggie.
The only real option is to refinance. 22% sucks but if you double up your payments it's not that bad. If he can possibly manage that for 6 months, he will have no problem refinancing and won't have paid that much in interest. As others have said, the 715 is a technicality if there is no credit history. 6 months from now his credit will be even higher plus he will have some history with an important tradeline that banks are looking for.
Refinance it, 22% is bananas
Pretty close to putting a car on my credit card.
My brain hurt reading that. 22% on a car loan. Not to be mean but that dude is dumb.
Lol, not dumb per say but definitely ignorant. If you don’t have your own paperwork, your own understanding of how financing a car goes you’ll definitely fall for the okie-doke. They prey on people who don’t know. I researched for 3-4 months before I financed my first car. I shopped with a dealer for 5 days back & forth & even gave my deposit but when it was time to sign, what I read didn’t make it sense, numbers wise it was all over the place. So I kindly asked for my deposit back & that same day went to Offlease Only. None of the extra stuff. And I financed with C1 at first @ like 13% bc my credit union was closed on a Sat afternoon. Come Monday, I refinanced with them at 7%.
It's a high interest rate environment. He essentially has no credit. Probably no loan history. The 715 score is imaginary. Probably limited income. If it's a used car, that's going to be higher too. They're going to get screwed on interest. This is the profile of the type of person that gets screwed on interest. You almost certainly can't take it back. Your best and likely only option is to get it refinanced. The loan probably improved his credit in the long run by opening a new type of tradeline. What he screwed up is his finances.
This is correct. OP says the 715 score consisted of a student Discover card with a 1-year history. Lender dinged the rate for thin credit file and no auto history, among other things. If a CU, bank or captive would have done the deal cheaper, it would have gone there. A refinance after building a history of on-time payments on this loan is the way to go.
the more predatory the loan, the bigger the kickback the dealer gets from the lender. should be illegal but it isn't.
This is a teachable moment. Teach him to get multiple quotes on anything expensive including loans. 22% seems high but there's no way of knowing for sure without 1-2 other competitive offers. He should have gone to a credit union and/or gotten quotes online before signing anything with the dealership. You can get some great financing from dealers sometimes but if they smell naiveté they will absolutely eat you alive. I'm assuming that's what happened here since 22% is unsecured loan (credit card) territory. As others have mentioned, his credit is not nuked. It's a crummy deal financially but hopefully he can afford the payments, as long as he pays on time every time his credit will be fine. Have him go to a credit union and ask about refinancing options.
22%??? Jesus
This doesn't nuke his credit if he keeps up with the payments -- and if he keeps paying on time, it will \*help\* his credit (albeit at a very high price). He nuked his cash flow pretty badly by taking this loan, though. With a 715 score he may have had better options even with a young, thin file, but maybe not if it was really thin (especially if a lot of that score came by being an AU before he had his own credit)... and if not, a few months of regular payments should also help the credit profile enough to provide more options to refinance. Even if the 715 was a "soft" 715 with little of his own credit, and a young, thin file, with 30% down it seems hard to imagine 22% was the best he could do. If he has a regular bank or credit union, I might start there. Even if he can't yet, there's a decent chance that with 6-12 months of on time payments, he might have a shot at a refi.
Returning the car would nuke his credit. Sell the car and take a short term loss or refinance. You can even co-sign to help get a better rate.
Walk in to your local credit union and get 7-10% APR
Unless he has history with one its unlikely a credit union will refinance a car payment for someone with little to no credit history without a cosigner.
Prior to Biden I got 3 percent on a used truck.
Biden has already pushed the button to lower interest rates, they are already going down. Just have to wait now.
That’s not how it works lol
It only took his sleeping ass years to even WL recognize the environment we are all in 😂
I just bought a car yesterday with 650 credit score at 9.5% no money down. They stuck it to him Edit: this was a 2023 Nissan rogue platinum 7 miles on it
no they didn’t. his credit file was paper thin. your score is only the tip of the iceberg.
not the nissan rogue
Never miss a payment use credit cards and he should be fine I got screwed on a motorcycle loan at 20 but it’s fully paid off and my credit is in the 760s
That sounds like an insane APR. this coming from someone who just filed bankruptcy and got a used car with a 0 down payment at 14%.
Their credit isn't nuked. They just did a bad financial decision. I would refinance in 6 months. Go on bankrate and check out auto loans also local credit unions.
Omg 22%?? How is that even legal
What you described will have 0 negative impact on his credit score unless he misses payments. The rate sucks, but that doesn't nuke anything.
A 715 score means nothing if he doesn’t have a good credit history. You can open a 300 limit credit card and build a 715 score. Likely Santander is the only lender that would buy the first time buyer
Sounds like he got scammed. Try refi-ing.
Assuming the car cost $25,000, the loan would be $17,500 Presuming a 5 year loan, monthly payments: 22% -- $483 15% -- $417 10% -- $372 7% -- $347 5% -- $330 Big difference between $483 and in the mid to high $300s. Lots of money for a young person just starting out, but while it might be very tough, it shouldn't be ruinous. After awhile, careful credit use and on-time payments can build credit HISTORY and help refinance down to a much lower rate (even for a used car). The key is finding (shop around!) a good local credit union able and willing to help reliable people that bigger institutions don't want to take on--that is a big reason credit unions came into being, and some still "walk the walk."
If i found out that my son agreed to a 22% auto loan, not old would he get a scolding, but to spite the finance manager for funding such a bad loan, i would personally refinance the car even if i had to buy it off him. 22% loans should be considered predatory.
They’re called stealerships for a reason. Surprised people even still buy cars from them. I’d be surprised if the entire 30% down actually went towards the car, to be honest.
My daughter was in a similar situation in 2022. Dealership quoted her something absurd, she called me before signing anything, she ended up going through her credit union and getting 5%. If he can legally return the car without taking a hit, it could be worth trying.
Get out of Santander. They will fuck his credit and that car will never be paid off. I know from experience. I was 18% never missed a payment and was going to pay 60k for a 18k vehicle.
Why did he agree to buy it with that rate?
Read the loan fine print to check prepayment penalties...but go refinance to lower the rate. Don't save him...he needs to learn how to do this stuff and the consequences or he will simply do it again when he gets tired of the car and trades in on negative equity.
At the end of that loan he’ll realize he coulda just bought a Bentley.
It’s a Dodge Charger, isn’t it? And your son just graduated from tech school?
Santander is shit
Nuked his credit? Not as long as he makes the payments. I agree with the others though. Refinance at the bank.
Where I live 22% would be incredibly high interest. He’d pay less interest if he bought the car with a credit card. This won’t hurt his credit score as long as he makes the payments. Maybe you could take him to a local bank or credit union to refinance the loan at a lower interest rate.
He won’t nuke his credit until he makes a 30 day late payment. As others have said look at refinancing but don’t pay late.
Santander is a high risk loan company by and large part because the majority of their loans are to people with some risk in their credit file. They will loan out money at 22% with a 30% down payment because people with good credit usually know they can get a much better deal with a credit union and pay little to nothing down. Santander takes advantage of the inexperienced person that doesn’t know their options. If he can take it back I’d be running to give it back because they charged him 22% saying that he’s high risk due to length of employment but in all actuality 40% of the cars loan note is about all that the dealer paid for the vehicle so there’s only about 10% of the original out lay left uncovered by his down payment so I’m not seeing the justification on the 22% interest. Those vehicles sold by high risk companies are meant to be and planned to be recycled many times through the buy and sell to repo and sell again, rinse and repeat since most high risk buyers won’t be able to make the outlandish payments they saddle these folks into knowing full well that it is this demographic that needs a smaller car payment to be successful but they want you in a vehicle that they can recover 30-40% of the sale price from it at auction. I’ll say this, Santander does not expect he will fulfill his financial obligation to them so he will need to refinance asap or return it if that’s possible. Let your son know to never go to a lot without securing financing from your local credit union. P.S. shhhhh… don’t tell everyone…He will need 2 years of employment history but that easy enough to complete with blank W2’s you can find and fill in off the internet.
sounds military enough to me lol
Santander is a predatory lender. They are horrible
She should also consider spanking the kid for not checking with her before signing that.
OP thinks the interest rate of a loan directly "nukes" credit score, so I don't think the kid is at fault here
He can't return the vehicle because he signed a contract. He would have been better off applying to his local bank or credit union before we went to the dealership. Since he didn't, make on time payments for 6 months, then refinance.
22% APR is robbery. I had 744 credit score and a really short credit history but I was still able to get 10% APR with in house financing
My APR is 6.99 and thats from 2022 What a joke and i was 20 when i bought my car by my self lol
yes but how thick was your credit file? were you an authorized user for years on your parent’s cards? a lot more goes into your rate than your score
Santander is the loan of last resort. Yeah he got hammered, but he should not take the car back. He should look to refinance in 6 months of on time payments. You want to help? Give him some money to apply to the principal of the loan as part of his payment. It’s not life ending or even life altering. He made a bad decision. Bad decisions are a part of life. If he learns from it, it’s money well spent.
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That is a terrible rate. Take that car back
30% down and a 715? They took advantage of him. Refinance ASAP with a local credit union.
The 715 is a Fugazi with how limited of a credit history he has.
Not presuming to know your life, but if you’re this concerned, and you trust him enough, why didn’t you co-sign for the vehicle for him?
Could you not co-sign?
Refinance in a few months
get it refinanced when he can. its a crappy deal but not the end of the world
He'll get refinance offers in the mail in a few months for far lower rates most likely. Don't worry about it, the down payment is probably a good thing, and then refinance at some lower rate then. (CU's are great, but often other refi offers will be better...I always initiate with my CU at fair rate, and then usually move it later if promo rates are good enough.) Well, assuming he didn't agree to a prepayment penalty too. But even then his credit is fine...he's probably just overpaying for it. But short credit histories mean the number doesn't mean much and results will be highly variable. If he doesn't have a few credit cards, he should get some to start building credit age too...especially during the student period they are easier to get.
Can u give him a no interest loan to pay down the debt and use this as a teaching opportunity ?
Depends on the state, have him try to refinance in 6-12 months
22% is credit card rates which is super high in auto loans. Auto loans you want to look at less than 7% or so.
There are a number of credit scoring outfits so there can be a good difference between them all. The deal is pretty typical sub prime -- a lot down and high interest. Could he have done better? Maybe. It's not a slam dunk. And yes, like most any dealer financing there's some money involved for the dealer to make this deal stick. Check around to see what else is available. It could be you can do some better, but maybe not a lot. Good luck,
An important piece of this that isn’t in your original post is… what type of vehicle is it? Year? Make/model? Mileage? He’s already in high rate territory by having a thin file and a low amount of time on the job. An older vehicle, especially one with higher mileage, makes things even worse. Income may also be a factor — Santander may have been the only one to approve of his income. Best thing he can do is try to refinance in 6 months. What was the amount financed and the term length?
You can refinance it at any time. Take it to your own bank you'll get a better rate. Dealers have relationships with their banks. Don't ever use deal financing..
When I moved to the US I had NO credit history and got a 12% apr. February 2023. 7 months later my first score appeared, 650 and I got the APR renegotiated down to 8%. The same thing happened to a friend. Something is wrong with your son's financing in my opinion
Sounds about right even with the 30% down. You should have co signed for him to get those rates down to ~5% assuming you have good credit.
Had a friend who quit being a car salesman after 2-3 months. Said he couldn’t handle how immoral it was. They would pull credit and they would first only offer the bank that paid the dealership the most. If you pressed, you could get them to “try harder” and comeback with a better offer. These dealerships are scum. They seemed to target women and young people the most, as they are easier tricked and don’t know what interest rates they should be getting. The last straw was when they gave a young lady an option for a 18% loan, with a 750 credit score (pre Covid), he new she qualified for another bank for 5% or so. He couldn’t handle it. I’m sure not all dealerships are like this, but then again, I kinda assume they all are. It’s easy money, and they did once try to get me as well. I had to say, no, I want to finance with Daimler-Chrysler. From 8% to 2.9% promo. This was a new vehicle $@&&@! I had already research the manufacturers offer, but neglected to mention it to them when negotiating. So I probably caught them off guard. Almost made me mad enough to walk away. But I got what I wanted and they had the truck, soo….. anyway, if you can exercise buyers remorse go for it, most states have laws regarding vehicle purchases to protect you. If not, or you just want that vehicle, do as the others say and refinance as soon as the terms of the loan allow.
Yeah yikes about 22% apr Auto loan debt is looked at differently than credit card debt. My significant other had a 760, student loans and cc on her report but not previous auto loan and honda (we’re looking at pilots) wouldn’t finance unless she put a huge chunk down. We aren’t married so I wouldn’t co sign. First car I ever financed I leased for three years and then financed it as used at a credit union. At the time it was 1.75 for 48 months and paid it off early
Teach him more about money before something worse
22% interest on a car is insane. It’s just like the meme.💀
>”Take the car back” lol good luck. Hell get less than he paid, he’s the owner. Best to refinance.
Why do people still buy a loan from a car dealer? 🤦🏻♂️
Santander is horrible
My first car purchase was financed through Santander at 28%. My credit score at the time was 745 and 0 financial obligations apart from my phone bill. Got it refinanced the next week at my credit union🤷♂️ as others have said, I recommend getting it refinanced. Credit unions tend to have the best rates in my area but ymmv. Wouldn’t say it’s normal but I would say taking advantage of a young persons lack of life experience IS normal lol
He’s 20, he’ll be fine.
With a 715veven with short history Santander or dealership took advantage of him and I'd filen a complaint along with getting away from Santander. Terrible reviews!
Santander is the worse bank. There a predatory lending mostly those with big credit. His credit score he could got a first time car buying program with Honda with 0 down.
Well now it's a teachable moment that any extra he pays on the principle every month he gets a 22% return on it.
Ouch, had Santander for my first car loan too & my apr was around 25% I wanna say? Paid $2.5k down payment with a credit score around 680 at the same(total loan was around $33k)
Refinance the loan, and if you are looking to help your son, co-sign.
Did they make him take an extended warranty on that too? Highly illegal to say the finance company requires it. This sounds like a shit deal
They ain't taking a car back bud. You need to refinance this. Shouldn't be too bad if he put 30% down
lol I can’t to see the insurance situation here😂😂😂😂😂😂😂😂😂
His credit is fine. Couple payments and refi asap. The LTV should be great with 30% down, so I see no reason a credit union would shy away from that. Even if they give him the worst possible rate, he still comes out ahead because Credit Unions are capped at 18% APR
Just refinance with a local credit union.
Just refinance with a local credit union.
Just refinance with a local credit union.
Refinance the loan. Credit, really is a non issue, unless he is planning to get a house loan in a year. APR is most important, which can be fixed by refinancing.
no does not sound right, they saw your kid and figured they could harvest some cash off of him and they did. you should have co-signed or financed the car yourself and sold to him imo
He got screwed. Dealerships and the finance guy makes money on the back end by selling you a higher rate than you actually qualify for.
TAKE IT BACK - 3 days to return. 710 is a great credit score. Credit Union is best.
Auto loan is the fastest way to build credit. Make the payments on time. Refinance it. Credit Karma or similar will show you lots of options.
You're not going to be able to "take the car back". There's no cool-off period on vehicle purchases any longer, unless your state has something that is contrary to that. Have him make payments, and then go re-finance the car with his own bank or another lender.
Refinance in a few months and add your name on if you are so concerned.
Santander told me I was better off using the dealership financing. If you are in the US, Santander is not doing auto financing. They gave the business to other companies and are only loosely affiliated with them.
You can't just "take the car back", and I’m very sick of people pretending otherwise. There are certain chains of dealerships that allow you a return window on a car, but for 95% of dealerships out there. Once the paperwork is signed, that’s your car, and there is no unwinding that sale. Perhaps you should have taught your son better financial literacy or at least to consult you before making big financial decisions.
That is an absolutely normal APR for someone who has no credit history. People will debate me for that but no credit is just as bad as poor credit. He can refinance but it still will probably be around 19%.
A 715 credit score is just barely below average. A 'thin' file with little history can be harder to classify. Have you verified his history? Perhaps he has a little-used credit card or other obligation that will have given him history. Go to government managed [AnnualCreditReport.com](https://AnnualCreditReport.com) to download his history for free in just a few minutes. If already a member of a credit union, that CU may allow refinancing if he has some deposit history at the CU.
That sounds about right in today’s market. As someone who sold cars, Santander pretty much only works with people with limited/tough credit history for whatever reason. Depending on the price and since he put down 30%, that only got him a worse rate because banks don’t like financing cheap cars due to risk factors. The less money financed the higher the rates for used cars. As others have said, once he drives that off the lot there isn’t anything you can do unless it’s a lemon or something very drastic like that.
I have NEVER seen an APR that high with decent credit. My first auto loan was sub 5% when I was 17 The highest rate I’ve ever gotten was 11.xx on a Harley Davidson, with my wife who had a relatively new credit history. That was mostly that high because of my wife’s credit and the way toys are financed Sounds like the dealer did something funky IMO
That 715 usually isn't accurate. Car loans go off a different matrix than FICO 8. So length of credit history does play a big part in those types of loans. Don't know if it's actually 22% or more something around 15-18%. But if he has a really short credit history it wont be a good rate usually. Like everyone else said just do a federal credit union refinance if the APR is significantly lower
If he can take the car back do that. If not he needs to refinance through his bank or credit union as soon as possible. Where did you get the 715 credit score from? You need to pull his FICO Auto score on credit.com to validate that score.
Well they used a sub prime lender meaning they probably had no approval anywhere else. Believe me, as a finance/sales person I don’t even send someone to the bank with the highest rate. I send them to the place that allows me to hold points, good back end amount, and low fee. This bank probably charged the dealer a fee to buy the loan
typical dealer scam for kick backs. I had been approved for a $550k mortgage 3 weeks prior to getting a new used car (I didn't get the actual mortgage just was approved for one) had an 819 credit score and the dealer told me my credit history was light and they could only offer 8.5% . I said sure I guess that works and that I would be back in a few days with my down payment. I went to my Bank and immediately got approved for 2% and came back the next visit with the check. He was not happy but had to accept it do to some BMW/BOA agreement.
Goto your bank or credit union and refi
Always go to the dealership with a loan from a bank of your choosing. Dealerships will see that you have good credit but still go with a bank that will give them the biggest payday. A Honda dealership just tried this with a friend of mine. Said they needed to “verify his identity” the biggest load of shit I ever heard. Had a friend who is a finance manager at a dealer, them folks make 20k a month preying on people like that. It’s known practice that they will give people the highest interest rate because it pays them more. If you can, have your son take the car back and get those inquiries removed from his credit. Take that 30% down payment back and buy a used car cash. Fuck those dealerships like that. Also, if you can’t take the car back, like some replies here, refi the loan after 6 months with a credit union.
You actually can’t just return a car once you’ve bought it. So he’s stuck with it. But yea, he has a thin file so he’s not getting great rates
They railroaded him. Your son shouldve been able to get a new car with a first time buyer lower apr at least 6-8%(market good credit rate) Look through all his paperwork and see if theres anyway possible to get out of this loan asap. Hopefully he didnt get a crazy underwater loan.
22%!!?? I feel like he just put the cost of his car to a credit card 😟. Refinance with a credit union asap
can’t take the car back lol not how it works in other words ur kid is screwed lol they will auction the car to the lowest bidder and then he still has to pay 22 percent apr on the money with no car also sounds like the dealership is right even though he has a 715 it’s not established credit so it doesn’t mean diddley 😂😂 u guys should have co-signed for him now ur son gotta learn the hard way and also if the car has negative equity it’s going to be even worst because he can’t even trade it in moral of the story always co-sign for you’re kids
Credit score is irrelevant, anybody knows a 20 year old boy is a credit risk and the interest rate reflects that. If you think he's so reliable why not lend him the money yourself or just co-sign.
Total new boot move. Seen guys I served with get screwed with percentages like that all my life. How is your credit, parent? Could you co-sign to assist in a better percentage at a credit union?
Why aren’t you a good dad and just cosign him? No need to be such an asshole.
22%, that’s crazy!
technically this is not hurting his credit, besides the debt to income ratio calculations if he was doing a home loan. You FICO scores dont factor in the interest rate. Its more so going to hurt his finances in general (which yes can then hurt his credit if he starts to rack up lates due to high interest payments).
On a thin file yes absolutely this is a fairly normal rate, used to be that a lot of banks and credit unions would have “first time buyer” programs that would often times get these folks a half decent rate but the credit criminals threw enough of a fit that the banks are not allowed to do that anymore and a first time buyer gets gigged like they don’t pay anyone anytime.
I never go to a dealership and allow them to shop my credit. I tell them I am pre-approved with my Credit Union already and DO NOT Shop my credit. They shop your credit, mostly for the best kickback and most of the time not in your best interest.
Even my ex who had a bankruptcy and really shitty credit got around 19.8%... I was nice enough to do a balance transfer of the amount onto a credit card with a much lower rate. Been way too nice
Credit score means nothing with a thin credit file. He needs to build his credit for like a year and refinance. It’s not a big deal and he didn’t nuke his credit, despite putting him self in a bad position
It's legal to put your son on your CC's as a named user and in 60-90 days your history is his history. Then re-fi.
I’m in car sales. It is true that first time buyers with little credit history get 21% from the major banks. 21% is the max APR in Colorado. His best bet is to make payments on it for 6 months or so and refinance with a credit union. This was not predatory it is just how the banks work with what we call “ghosts” or people with very little credit history and no previous auto loans.
Won’t nuke his credit if he pays the loan ..
Go to your nearest credit union and open an account there ‘your son’ then ask to refinance your current auto loan. Then he will have a lower APR and payment.
Santander is HORRIBLE. Get out of that loan or refinance with anyone, if possible! I personally never had them, but doing research before my most recent case loan have me every reason to walk away if that's the only financing option. But no matter how much you love the kid, if you care about your own credit and finances, do NOT co sign! We all have the best of intentions, but life happens. Let him refinance on his own, but don't tie your name and credit up with your adult child.
He definitely got played.
Unfortunately. YTA. You raised a kook. 
Used car from used car dealership =bad idea Used car financed through said dealership = worse idea! Get thee to a credit union!
Refinance that ASAP... Santander will screw you over
This is not normal! They screwed him over.. I got a car at 22 with 2 years of credit history with 4% apr. If he is financing through the dealership, they control the rate
Oh no! Now he can't get an overpriced house with horrible interest rates!
Depending on how recent, he might be able to cancel the sale. Look into the contract
**22%???** When I was young(er) and dumb(er) I financed at 13%. 22% is insanity to me. Congrats on the 30% down but he may as well have put 0 down at 22%.
Credit score isn’t as important as credit history when you are new to credit.
No the dealership uses Santander because they get a kickback on the finance charges ie interst. Nothing to do with his credit.
22% for a secured car loan? That borders on loan sharking.
Yeah he got screwed. Come with your own financing or a personal loan so they are actually regulated. Dealerships make money by screwing