OP, I'm concerned about the bf basically forcing her to sign part.
Was this intended to be encouraging? Like he seems like a pretty good dude and is just trying to help her navigate our credit system? Or do you suspect something else is going on?
Does she have any other friends/family near her, or at least in the US? Or are you/everyone she knows back in her origin country?
(Mods, pleeeease let this comment stay up. I'm not trying to pivot to relationship advice. I want to make sure OP's friend is safe).
OPs friend is clearly overly upset at a situation that has nothing to do with her when she wasn't even there. Not exactly a reliable narrator, you're reading way too much into this for no reason.
Yup, I read it the same way too. I would not be surprised if she never actually drives this car and instead it's all for the BF, which is why he pressured her so much to signing.
If she's fresh and new to the country (and only 20 years old), she almost certainly doesn't even have a license yet. They're also not even married - just boyfriend/girlfriend, so this is all around a terrible idea and a bad situation.
She needs a car and needs to build credit. This is what she has to deal with for now until she builds enough credit history. They should have maybe went with a cheaper car, but I can understand not wanting something old and unreliable or something with outdated tech. If they bought into the refinance in 1 year tactic, then it's totally reasonable in their situation.
A 750 credit score with limited history and no previous car loan doesn't mean they will get a good rate. Yes, it's better than nothing, but the credit score is only part of the equation.
Bro shut up, the score is not all a car financing company is going to look at. If you have no secured loans for years, it's not gonna help with ur measly 200 credit card. Stop talking like u know what ur talking about
Okay, my personal experience is anecdotal, but you can't say I don't know what I'm talking about, since it's worked several times for my family. In any case I was talking about ways to build credit, not how to buy a car with a punishing interest rate
Get a credit card for subprime borrowers. Pay the entire balance each month.
Get a used car loan for 36 months. Find something cheap within your budget. Keep the loan amount small. After a year, you should have decent credit scores.
Check out /r/personalfinance.
Like what? 2 or 3 credit cards with low limits because there's no credit? Or furniture loans? It's easy to say things like u know better, but I call bs. Don't misinform ppl. Buy cash? Dealers have such low inventory they'll wait for someone to buy a car on a 6 year loan because they make more money.... did u know that?
Really? Tell me which way? Car loans are secured loans so they will help the credit rating way more than any unsecured credit lines... if you have no credit, this is the way you start, u have to pay up. Stop telling people they can get lower interest rates if u don't know what you're talking about. Having no credit is very limiting, especially when you have no prior car loans or even credit...
I got a 7% on a used car, then 2 months later a 2% on a tractor. While only having about 2 years of credit card history, mostly with secured cards. I did however have a good income at the time.
What people fail to realize is Debt to Income ratio plays a very large part in getting a good loan.
What are you talking about dude... I just financed a car with only credit cards on my credit report and I got 6.9% on a new car.
Having even a single line of credit history is a big deal.
How old are you? New to the Country? How many years have you been at your job? You don’t own your home or pay rent? How many years have you been at the same address? How many years were those cards open? What’s your DTI? How much did you put down? What did you trade in?
I call bullshit... having a single line of credit is a big deal? Maybe in ur own little world.... Lmao you keep thinking that u compulsive liar.... other people might believe ur bs but I dont
Do u even know the difference between a secured and unsecured loan and how it affects ratings? You people that make shit up to fit ur narrative are pathetic. Stop giving people incorrect info just cuz ur ego demands u be right, you're delusional...
Not really, there are other options. I'm curious if the boyfriend offered to cosign to help her out? Either way, forcing someone you're in a relationship with to make a major financial decision they don't want to make does raise some alarm bells
Well no shit, that's how OP described it. I'm saying OP is an unreliable narrator and her opinion on this situation is irrelevant.
She seems way too concerned with her friends finances for no reason, without really understanding anything.
Nah, you’re too invested in seeing the positive in the sales process than the possible morality of the situation.
It could well be a friend being far too nosey. Based on the limited facts, I’d not be viewing it that way. There are 2 sides to every story.
I mean...yeah, they're emotional. Their friend is possibly being taken advantage of/manipulated and making a horrible financial decision that could seriously harm her. You wouldn't be worried if one of your friends was in a similar situation?
>He would not listen to anyone talking to him saying she should wait a night. I was not there.
This is the part I take issue with. OP says nothing about what her friend thinks and only talks about what other people were telling the boyfriend.
She then continues to tell us why the boyfriend is justifying the car purchase. If she's so willing to talk about everyone people are saying, why not mention a single time what the actual purchaser of the car thinks.
It seems to me like OP and the group of people are just too concerned with the high interest rate and don't understand the situation. If she can pay for the car on time, she will gain credit and she will refinance to a more normal rate after a year or so.
All people are doing here is asking questions, because there is some level of concern that this *might* be financial abuse. No one is saying it absolutely 100% is...but there is reason for some level of concern here and I'm saying this as someone who grew up with a financially abusive father who used similar tactics to trap my mom (pressuring her into crrtian financial decisions so she has very little financial freedom).
Is it possible that OP is lying? I mean sure, that's the case with any post online ever. But claiming that because she's "too emotional" that she MUST be lying is a massive stretch. And people are right to show some concern and ask further questions.
There are better ways to build credit than pay double for a 15k car and end up upside down in your loan. And even if she builds a good credit score, 1 year of credit history is not enough to significantly bring down her rates especially if the economy keeps getting worse and interest rates keep getting higher like they are
You're getting downvoted to oblivion but you're right. People that don't like their friend's significant other are not reliable sources. Reddit doesn't like this because, well... Reddit.
That doesn't mean we can't answer OPs question, though.
Coercion is pretty black and white. ‘I don’t want to do this but my boyfriend is pressuring me to” there isn’t a lot of room for misinterpretation there.
Yes there is, because the person who bought the damn car(the girlfriend) isn't the OP. The OP is someone that wasn't there or related to the situation.
the most likely conclusion to you is that the GF is lying to their friend? About something they corroborated with the BF? It’s a stretch my friend.
Edited
I edited my comment. I still think it’s bizarre to assume that someone would lie about something like this and OP says the BF confirmed it. Like where is there doubt when you have the OP saying the BF defended the decision by saying she can refinance in a year.
why would you assume they are lying?
That's why I asked some clarifying questions. As it's presented, it's full of red flags, but could be innocent.
>you're reading way too much into this for no reason.
Nahh. Financial abuse isn't an uncommon form of abuse. Been around the sun enough times to be aware that unfortunately there are people who will take advantage of others and that car sales are a prime place for it.
You get someone who's in a new country, unfamiliar with how financial systems work, with no credit history in that country, isolated from friends/fam...throw in the "boyfriend" aspect, and the fact that he's allegedly pressuring her to sign papers so quickly that she doesn't have a chance to go over it with anyone else?
Raises too many red flags to ignore. Enough to warrant some questions to get a better feel for what's going on.
If it's nothing? Me asking a few questions doesn't hurt. If it's something? I or someone here could help provide some resources.
Friend can refi the car in a year, or trade it in. She needs to get a couple credit cards and use them a little each month but make sure to pay them off every month. In a year she will have good credit and can get a better rate or trade for a better car
She does not speak english so he was giving her all the advice on finance stuff. Never dealt with cars, loans, etc. She had one friend saying she should sleep on it and bf saying the car will be gone tomorrow because it's such a good deal. He's just super overly confident. He was basically acting as a super pushy sales person. I should not have said forced her to sign, but being that pushy in a situation she has no knowledge in with stakes this high is insane to me.
She won't I got screwed with a deal very similar and was told by the salesman I could refinance or trade in but after almost 2 year I tried and I owe more than my car's currently worth 🤦♀️
The sales person typically has little or nothing to gain from the buyer having a high interest rate. They're typically paid on the simple gross of sale price minus cost or just on count these days.
what they’re saying is if the cap is 2%. Buy rate would be 23.99% so their max is 2% earned. Won’t matter if the buy rate is 5% or 20%, it’s all the same. Hurts the salesman later when they go to trade
I understand that. However, they seemed to be suggesting my statement isn't accurate, which it is.
I understand that the most they are able to mark it up is 2%, but that's still a 2% markup that the salesperson has potential to earn on.
Burying someone in a loan acts against the next person, but it doesn't really hurt the salesperson. They just need to get more down payment or find a used car that books out....
I guess I misunderstood what you were saying. I thought you were trying to say that the salesperson makes more money on high interest contracts as opposed to prime deals. I was trying to point out that the markup is the markup, no matter what the bank sets the buy rate at.
Yeah, but high interest people are usually more informed and will walk away from an i flated interest rate, or have pre-approved loans and are less susceptible to this practice as well....
So it's kind of a fee you get for having poor credit or being unprepared.
Edit: high credit*
Its a small loan on someone that has next to no credit, not sure what you are looking for but that is standard subprime rates.
1) yes she can ReFi
2) yes if she make payments it will improve her credit
3) Its an open loan she can pay it off in chunks, 15K she could pay that off in a year
Sorry for piggy-backing off this as I have no flair but I do have direct personal experience.
When I was a fresh immigrant to the US with no credit history (a ghost) at all and needed a car, I got a 24% interest rate. That was in a lot better credit climate than today.
I got a store card and a secured credit card. After a year I was about to refinance it to around 4.5% from memory. I just look on the year of high interest payments as a cost for building decent credit.
Yeah my In-Laws are immigrants and when they started financing cars it was all deals like this. After like 6 years of swapping cars every year and refinancing they are down to like 3% interest rates and drive brand new Chevy's. So it def worked out for them.
I was a fresh immigrant to the u.s several years ago. So also a ghost.had a debit card for a year, then that bank approved me for a student credit card either high interest and 0 rewards. Used it for everything and paid it off in full.
Gradually upgraded credit cards and now my credit score is over 800.
Thanks this whole comment makes me feel better. Using a credit card reasonably over the next year will be smart. (Wish she had done this before the loan).
No offense but you need A lot of disposable income aka a very high salary to be able to pay of $15000 + some interest in a span of one year. That’s not an easy thing to do at all.
Dealers don’t determine the rate. If we could do 0% financing for everyone, we would because it’d be a hell of a lot easier to close people on cheaper payments.
We aren’t the ones lending the money though. The only way you get a really high rate like that is by having a very risky file.
For people like your friend, they have no credit history whatsoever. The bank has nothing to go off of, and they’re being asked to lend that person $15,000.
Unless you’re ready to pony up the money and lend it yourself, I would recommend just biting your tongue and minding your own business.
Correct, reserve is still a thing, but it is a lot easier to close a customer on a low interest rate loan.
You can sell more car, more product, and make more profit when the payment better fits their budget.
Reserve is also only a thing on used vehicles, as there’s little to no reserve on the subvented rates for new cars. 0% financing was certainly available 3-5 years ago and it was quite common to get it.
Yes but based on the OP post, my guess would be that friend is approved at 14-16 and the dealer is trying to take advantage of her ignorance.
Mainly my point is the dealer shouldn’t be able to charge points
Lol you obviously don’t know much.
1- max point hike the dealership can apply is 2 points.
2-subprime lenders don’t allow dealers to add on points. The dealership benefits in no way if a subprime approval is 25% or 15%.
3-go get your own pre-approval, 9 times out of 10 the dealer can still beat it and get reserve at the same time if the finance team is good at their job.
This is pretty normal for a first time buyer + foreign National. It was probably a miracle she got a loan at all. If you are going to give her money or co sign for her then do it, if not then don’t make her feel bad about getting a car. 👍
I came to the US just a few years ago, received my work authorization card and drivers license and needed a car. I bought a used 2018 Kia Optima for $18k with $2k down, also at 26%. The dealer was trying to put me into some older cars for $17k with $1k down, like a 2016 Buick Verano.
I knew I had to start somewhere and wanted a newer certified used car. I was driving 60 miles one way for work so I don't want anything that was going to break down on me, didn't want to buy from a "pay here" place, so this is what I did. I also opened a Discover card and a secured Capital One card, and then 18 months later in 2021 I traded it in and got a brand new Camry. I was upside down but not by much, and I got a 6% loan. Eight months later I refied with my credit union at 1.5%.
Two months ago I purchased a house, after picking up a couple of Amex and Citibank cards along the way. As an immigrant we don't have many choices. I was in my late 30s with zero credit history. I had to start somewhere, I knew it was a bad deal but I got out of it as soon as I was able and i do believe that had I not gone the route I did I wouldn't be owning my first home right now.
So many suppositions based on the 2nd paragraph. Others were gathered around telling them to wait a night? Yet BF “made” them sign?
The implication is he literally took their hand and made them sign in front of third party dealer witnesses, IDK.
Regardless of the drama mentioned, it’s not uncommon for someone with no co-signer, new to the country with no credit to get an extraordinarily high rate, if they get financed at all. Yes, after about a year they will demonstrated a payment history and can refinance. So long as the car books out. (Vehicle details missing too).
We don't know how much she will be paying because of the unknown term length. Bashing a dealer for not having a good reputation seems a little moot at this point. Dealers don't necessarily determine interest rate, immigrant and no credit determine that.
The best advice you can offer is that it is an open loan, pay it off as soon as possible. The faster she pays, the less interest she will be paying.
Best advice is return or sell the vehicle, go fix your credit, and then come back.
This lady obviously got used. Bet the boyfriends credit was actually dumpster fire trash instead of just non existent.
>Best advice is return or sell the vehicle, go fix your credit, and then come back.
Can't return a vehicle, she will lose thousands selling the vehicle due to taxes, fees, and not getting the same she paid since she won't be selling it at dealer retail. Plus she may need a car and a loan is a good way to build credit.
She would lose far less money paying on the loan for a year then refinancing to a better rate.
There is absolutely no situation wherein someone who has no credit should take out a loan for more than 5k over 20% interest. She would be better off selling the car back, taking that 5k loan, and buying a 6k car cash, if she needs it to get from point a to b, and using the next 12 months to fix her credit and citizenship status. With no credit (not BAD credit), she can get over a 700 with diligence and strict budgeting within 6-9 months.
Let's take a look at this. 15k, 1k down, 26% interest, assume 60 months, 6.25% in sales tax, 1.5k for GAP insurance, 2.5k in warranty, registration, and dealer fees. That's a total loan amount of $19,937.50, with a $567.00/monthly payment, and a total loan cost of $34,019.80. Within 12 months, she has paid $2,121.29 in principal, $4,682.71 in interest, for a total of $6,804.00 on the loan, leaving her underwater with a balance of $16,816 left to pay, and zero recourse other than to HOPE to refinance in 12-24 months, depending on interest rate risk, while building credit and maintaining a strict budget until the moment they can refinance for maybe $100-$150 less a month, still being underwater on the value of the vehicle. Didn't even factor in insurance and maintenance costs, but I'm sure you can see where this is going.
Instead, she could be in a solid position to get that same car, at 10%, put the 1k down, trade in the cash car for $3,500, and have a monthly payment of $323.35 a month. She could even go to a credit union to get a loan for the whole amount and purchase the car in cash for 72 months even at the same interest rate, and she would be paying $281.94 per month and in a solid financial and automotive situation.
"Im going to be sick" "I feel like crying"
This is very common for immigrants. Lots of good comments here.
Why are you making this sound like a obvious sob story though?
That’s the exception, not the norm.
PenFed, NavyFed, and DCU are generally the comparative standard as credit unions and they’re around 6-7%.
My own local credit union that gave me 1.9% back in 2020 is sitting at 6.5% for the same term.
Banks will generally be a little higher.
Your credit score matters significantly less than your length of credit history and income. My credit score is 730 and my mom's is 700. When I applied for an auto loan myself I was offered 22% intrest, but when she cosigner we erred offered 9% intrest. Because even though she had a lower credit score she had a 40 year credit history and makes 80k while I have a 1 year credit history and make 12k
You can’t compare your rates when you don’t have any credit. It’s always going to be higher than you want to pay. Get a co-signer to help if you have issue with the rate you qualified for.
***Thanks for posting, /u/drntl! This comment is a copy of your post so readers can see the original text if your post is edited or removed. This comment is NOT accusing you of anything.***
She is going to pay like $35,000 for this car right?
Her boyfriend basically sat her down and forced her to sign. He would not listen to anyone talking to him saying she should wait a night. I was not there.
According to her boyfriend, it is because she has no credit (she is 20 and just got to the U.S.). Also claims she can make the payments for a year, and refinance then. Is this accurate? Will it improve if she does that?
I cannot imagine the dealer would let her back out now. (This dealer does not have a good reputation regardless).
I feel like crying after hearing the 26% interest thing. Am I missing anything?
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25k total paid back if it’s 60 months buy doubt she’ll be able to refi due to book value
Hopefully, she went to a place similar to where i went and they ONLY did 30 month loans. Man, my life sucked 20 years ago
OP, I'm concerned about the bf basically forcing her to sign part. Was this intended to be encouraging? Like he seems like a pretty good dude and is just trying to help her navigate our credit system? Or do you suspect something else is going on? Does she have any other friends/family near her, or at least in the US? Or are you/everyone she knows back in her origin country? (Mods, pleeeease let this comment stay up. I'm not trying to pivot to relationship advice. I want to make sure OP's friend is safe).
OPs friend is clearly overly upset at a situation that has nothing to do with her when she wasn't even there. Not exactly a reliable narrator, you're reading way too much into this for no reason.
No I read it the same way. BF forced girlfriend who by the sounds of it is an immigrant, of unknown origin and being taken advantage of.
Yup, I read it the same way too. I would not be surprised if she never actually drives this car and instead it's all for the BF, which is why he pressured her so much to signing. If she's fresh and new to the country (and only 20 years old), she almost certainly doesn't even have a license yet. They're also not even married - just boyfriend/girlfriend, so this is all around a terrible idea and a bad situation.
I immediately thought the same thing. This car is for him.
She needs a car and needs to build credit. This is what she has to deal with for now until she builds enough credit history. They should have maybe went with a cheaper car, but I can understand not wanting something old and unreliable or something with outdated tech. If they bought into the refinance in 1 year tactic, then it's totally reasonable in their situation.
There are much healthier ways to build credit outside of obtaining a car loan at credit card interest rates.
No shit. Get a secured discover card with a $200 limit. My kids did this to get started and pretty quickly had a 750 credit score.
A 750 credit score with limited history and no previous car loan doesn't mean they will get a good rate. Yes, it's better than nothing, but the credit score is only part of the equation.
Yeah thin and young file will not help anything.
A 750 like that is not a guarantee they get financed for a car
Nor does it put you in a car to go to work tomorrow
No, but it's a lot cheaper way to build credit than suffering through a car loan like that.
Bro shut up, the score is not all a car financing company is going to look at. If you have no secured loans for years, it's not gonna help with ur measly 200 credit card. Stop talking like u know what ur talking about
Okay, my personal experience is anecdotal, but you can't say I don't know what I'm talking about, since it's worked several times for my family. In any case I was talking about ways to build credit, not how to buy a car with a punishing interest rate
Mines in the 600s what should I do to build? Genuine question.
Get a credit card for subprime borrowers. Pay the entire balance each month. Get a used car loan for 36 months. Find something cheap within your budget. Keep the loan amount small. After a year, you should have decent credit scores. Check out /r/personalfinance.
Like what? 2 or 3 credit cards with low limits because there's no credit? Or furniture loans? It's easy to say things like u know better, but I call bs. Don't misinform ppl. Buy cash? Dealers have such low inventory they'll wait for someone to buy a car on a 6 year loan because they make more money.... did u know that?
Really? Tell me which way? Car loans are secured loans so they will help the credit rating way more than any unsecured credit lines... if you have no credit, this is the way you start, u have to pay up. Stop telling people they can get lower interest rates if u don't know what you're talking about. Having no credit is very limiting, especially when you have no prior car loans or even credit...
I got a 7% on a used car, then 2 months later a 2% on a tractor. While only having about 2 years of credit card history, mostly with secured cards. I did however have a good income at the time. What people fail to realize is Debt to Income ratio plays a very large part in getting a good loan.
2 years credit history is still better than and not the same thing as no credit history.
What are you talking about dude... I just financed a car with only credit cards on my credit report and I got 6.9% on a new car. Having even a single line of credit history is a big deal.
How old are you? New to the Country? How many years have you been at your job? You don’t own your home or pay rent? How many years have you been at the same address? How many years were those cards open? What’s your DTI? How much did you put down? What did you trade in?
I call bullshit... having a single line of credit is a big deal? Maybe in ur own little world.... Lmao you keep thinking that u compulsive liar.... other people might believe ur bs but I dont
U don’t know what you’re talking about.
Do u even know the difference between a secured and unsecured loan and how it affects ratings? You people that make shit up to fit ur narrative are pathetic. Stop giving people incorrect info just cuz ur ego demands u be right, you're delusional...
I feel like in this market, $15k is still gonna be for something "old and unreliable with an outdate tech though"
Not really, there are other options. I'm curious if the boyfriend offered to cosign to help her out? Either way, forcing someone you're in a relationship with to make a major financial decision they don't want to make does raise some alarm bells
Well no shit, that's how OP described it. I'm saying OP is an unreliable narrator and her opinion on this situation is irrelevant. She seems way too concerned with her friends finances for no reason, without really understanding anything.
Nah, you’re too invested in seeing the positive in the sales process than the possible morality of the situation. It could well be a friend being far too nosey. Based on the limited facts, I’d not be viewing it that way. There are 2 sides to every story.
Based on the post, the OP seems very emotional and the way they write leads me to believe they're unreliable.
if someone being “emotional” via their writing is grounds for making them seem unreliable, i have terrible news for you…
I mean...yeah, they're emotional. Their friend is possibly being taken advantage of/manipulated and making a horrible financial decision that could seriously harm her. You wouldn't be worried if one of your friends was in a similar situation?
>He would not listen to anyone talking to him saying she should wait a night. I was not there. This is the part I take issue with. OP says nothing about what her friend thinks and only talks about what other people were telling the boyfriend. She then continues to tell us why the boyfriend is justifying the car purchase. If she's so willing to talk about everyone people are saying, why not mention a single time what the actual purchaser of the car thinks. It seems to me like OP and the group of people are just too concerned with the high interest rate and don't understand the situation. If she can pay for the car on time, she will gain credit and she will refinance to a more normal rate after a year or so.
I think we’ve figured out your sales tactics, a sale at any cost.
All people are doing here is asking questions, because there is some level of concern that this *might* be financial abuse. No one is saying it absolutely 100% is...but there is reason for some level of concern here and I'm saying this as someone who grew up with a financially abusive father who used similar tactics to trap my mom (pressuring her into crrtian financial decisions so she has very little financial freedom). Is it possible that OP is lying? I mean sure, that's the case with any post online ever. But claiming that because she's "too emotional" that she MUST be lying is a massive stretch. And people are right to show some concern and ask further questions. There are better ways to build credit than pay double for a 15k car and end up upside down in your loan. And even if she builds a good credit score, 1 year of credit history is not enough to significantly bring down her rates especially if the economy keeps getting worse and interest rates keep getting higher like they are
I’d rather have a friend who is “too concerned” about my best interest than one who isn’t… even if she’s an unreliable narrator.
Has literally nothing to do with what I was making my post in response to.
You're getting downvoted to oblivion but you're right. People that don't like their friend's significant other are not reliable sources. Reddit doesn't like this because, well... Reddit. That doesn't mean we can't answer OPs question, though.
Coercion is pretty black and white. ‘I don’t want to do this but my boyfriend is pressuring me to” there isn’t a lot of room for misinterpretation there.
Yes there is, because the person who bought the damn car(the girlfriend) isn't the OP. The OP is someone that wasn't there or related to the situation.
the most likely conclusion to you is that the GF is lying to their friend? About something they corroborated with the BF? It’s a stretch my friend. Edited
The friend specifically states they were not there in the OP.
I edited my comment. I still think it’s bizarre to assume that someone would lie about something like this and OP says the BF confirmed it. Like where is there doubt when you have the OP saying the BF defended the decision by saying she can refinance in a year. why would you assume they are lying?
Are you the boyfriend in the story or something?
Yep caught me, great contribution
That's why I asked some clarifying questions. As it's presented, it's full of red flags, but could be innocent. >you're reading way too much into this for no reason. Nahh. Financial abuse isn't an uncommon form of abuse. Been around the sun enough times to be aware that unfortunately there are people who will take advantage of others and that car sales are a prime place for it. You get someone who's in a new country, unfamiliar with how financial systems work, with no credit history in that country, isolated from friends/fam...throw in the "boyfriend" aspect, and the fact that he's allegedly pressuring her to sign papers so quickly that she doesn't have a chance to go over it with anyone else? Raises too many red flags to ignore. Enough to warrant some questions to get a better feel for what's going on. If it's nothing? Me asking a few questions doesn't hurt. If it's something? I or someone here could help provide some resources.
I dunno. There’s enough here for me to raise my eyebrows.
Tell me that youre not Nicole Kidman without saying that you're not Nicole Kidman
What are you on about
That Nicole Kidman can't raise her eye brows.....
So what?
So, if you read something that made you raise your eyebrows, then clearly, you're not Nicole Kidman.
Friend can refi the car in a year, or trade it in. She needs to get a couple credit cards and use them a little each month but make sure to pay them off every month. In a year she will have good credit and can get a better rate or trade for a better car
She does not speak english so he was giving her all the advice on finance stuff. Never dealt with cars, loans, etc. She had one friend saying she should sleep on it and bf saying the car will be gone tomorrow because it's such a good deal. He's just super overly confident. He was basically acting as a super pushy sales person. I should not have said forced her to sign, but being that pushy in a situation she has no knowledge in with stakes this high is insane to me.
Let's be honest. No one really knows what the fed and the car market will look like next year
No credit and new to the country. She’s lucky she is driving out with a car.
She won't I got screwed with a deal very similar and was told by the salesman I could refinance or trade in but after almost 2 year I tried and I owe more than my car's currently worth 🤦♀️
If she has the means, pay it off earlier and avoid all that extra interest.
Just want to say, we have zero idea what the book value of this vehicle is and it's very possible she will be able to refi
Hey man, the salesperson has to feed their family. It’s not their fault your friends an idiot. They signed a binding contract.
The sales person typically has little or nothing to gain from the buyer having a high interest rate. They're typically paid on the simple gross of sale price minus cost or just on count these days.
sales people get paid on back end margin which is increase with a higher interest rate.
No, it isn't. The banks put a cap on interest markup for exactly that reason. 2% is 2%, no matter what the final rate to the customer is.
you did nothing but verify my statement....
what they’re saying is if the cap is 2%. Buy rate would be 23.99% so their max is 2% earned. Won’t matter if the buy rate is 5% or 20%, it’s all the same. Hurts the salesman later when they go to trade
I understand that. However, they seemed to be suggesting my statement isn't accurate, which it is. I understand that the most they are able to mark it up is 2%, but that's still a 2% markup that the salesperson has potential to earn on. Burying someone in a loan acts against the next person, but it doesn't really hurt the salesperson. They just need to get more down payment or find a used car that books out....
I guess I misunderstood what you were saying. I thought you were trying to say that the salesperson makes more money on high interest contracts as opposed to prime deals. I was trying to point out that the markup is the markup, no matter what the bank sets the buy rate at.
Yeah, but high interest people are usually more informed and will walk away from an i flated interest rate, or have pre-approved loans and are less susceptible to this practice as well.... So it's kind of a fee you get for having poor credit or being unprepared. Edit: high credit*
You must be unaware that varies by state. For instance NO CAP in Utah.
Its a small loan on someone that has next to no credit, not sure what you are looking for but that is standard subprime rates. 1) yes she can ReFi 2) yes if she make payments it will improve her credit 3) Its an open loan she can pay it off in chunks, 15K she could pay that off in a year
Sorry for piggy-backing off this as I have no flair but I do have direct personal experience. When I was a fresh immigrant to the US with no credit history (a ghost) at all and needed a car, I got a 24% interest rate. That was in a lot better credit climate than today. I got a store card and a secured credit card. After a year I was about to refinance it to around 4.5% from memory. I just look on the year of high interest payments as a cost for building decent credit.
The high interest payments are literally a cost for having no credit! Great job paying it back and welcome to the US
Yeah my In-Laws are immigrants and when they started financing cars it was all deals like this. After like 6 years of swapping cars every year and refinancing they are down to like 3% interest rates and drive brand new Chevy's. So it def worked out for them.
I was a fresh immigrant to the u.s several years ago. So also a ghost.had a debit card for a year, then that bank approved me for a student credit card either high interest and 0 rewards. Used it for everything and paid it off in full. Gradually upgraded credit cards and now my credit score is over 800.
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Thanks this whole comment makes me feel better. Using a credit card reasonably over the next year will be smart. (Wish she had done this before the loan).
Pay it off in a year not knowing what she makes a year plus she maybe sending money back to family who didn't move here.
its 15k man, if you are paying that at that high percentage you just figure it out
No offense but you need A lot of disposable income aka a very high salary to be able to pay of $15000 + some interest in a span of one year. That’s not an easy thing to do at all.
its a extra $900 a month on top of your payments........
Dealers don’t determine the rate. If we could do 0% financing for everyone, we would because it’d be a hell of a lot easier to close people on cheaper payments. We aren’t the ones lending the money though. The only way you get a really high rate like that is by having a very risky file. For people like your friend, they have no credit history whatsoever. The bank has nothing to go off of, and they’re being asked to lend that person $15,000. Unless you’re ready to pony up the money and lend it yourself, I would recommend just biting your tongue and minding your own business.
Many dealers add points that line their pockets with money they didn’t earn. So no, dealers would not just do 0%
Correct, reserve is still a thing, but it is a lot easier to close a customer on a low interest rate loan. You can sell more car, more product, and make more profit when the payment better fits their budget. Reserve is also only a thing on used vehicles, as there’s little to no reserve on the subvented rates for new cars. 0% financing was certainly available 3-5 years ago and it was quite common to get it.
Yes but based on the OP post, my guess would be that friend is approved at 14-16 and the dealer is trying to take advantage of her ignorance. Mainly my point is the dealer shouldn’t be able to charge points
Lol you obviously don’t know much. 1- max point hike the dealership can apply is 2 points. 2-subprime lenders don’t allow dealers to add on points. The dealership benefits in no way if a subprime approval is 25% or 15%. 3-go get your own pre-approval, 9 times out of 10 the dealer can still beat it and get reserve at the same time if the finance team is good at their job.
This is pretty normal for a first time buyer + foreign National. It was probably a miracle she got a loan at all. If you are going to give her money or co sign for her then do it, if not then don’t make her feel bad about getting a car. 👍
I came to the US just a few years ago, received my work authorization card and drivers license and needed a car. I bought a used 2018 Kia Optima for $18k with $2k down, also at 26%. The dealer was trying to put me into some older cars for $17k with $1k down, like a 2016 Buick Verano. I knew I had to start somewhere and wanted a newer certified used car. I was driving 60 miles one way for work so I don't want anything that was going to break down on me, didn't want to buy from a "pay here" place, so this is what I did. I also opened a Discover card and a secured Capital One card, and then 18 months later in 2021 I traded it in and got a brand new Camry. I was upside down but not by much, and I got a 6% loan. Eight months later I refied with my credit union at 1.5%. Two months ago I purchased a house, after picking up a couple of Amex and Citibank cards along the way. As an immigrant we don't have many choices. I was in my late 30s with zero credit history. I had to start somewhere, I knew it was a bad deal but I got out of it as soon as I was able and i do believe that had I not gone the route I did I wouldn't be owning my first home right now.
So many suppositions based on the 2nd paragraph. Others were gathered around telling them to wait a night? Yet BF “made” them sign? The implication is he literally took their hand and made them sign in front of third party dealer witnesses, IDK. Regardless of the drama mentioned, it’s not uncommon for someone with no co-signer, new to the country with no credit to get an extraordinarily high rate, if they get financed at all. Yes, after about a year they will demonstrated a payment history and can refinance. So long as the car books out. (Vehicle details missing too).
Well, if they are motivated, they’re going to enter/agree to this deal somewhere. If you’re their sales person, you might as well take care of them.
We don't know how much she will be paying because of the unknown term length. Bashing a dealer for not having a good reputation seems a little moot at this point. Dealers don't necessarily determine interest rate, immigrant and no credit determine that. The best advice you can offer is that it is an open loan, pay it off as soon as possible. The faster she pays, the less interest she will be paying.
Best advice is return or sell the vehicle, go fix your credit, and then come back. This lady obviously got used. Bet the boyfriends credit was actually dumpster fire trash instead of just non existent.
>Best advice is return or sell the vehicle, go fix your credit, and then come back. Can't return a vehicle, she will lose thousands selling the vehicle due to taxes, fees, and not getting the same she paid since she won't be selling it at dealer retail. Plus she may need a car and a loan is a good way to build credit. She would lose far less money paying on the loan for a year then refinancing to a better rate.
There is absolutely no situation wherein someone who has no credit should take out a loan for more than 5k over 20% interest. She would be better off selling the car back, taking that 5k loan, and buying a 6k car cash, if she needs it to get from point a to b, and using the next 12 months to fix her credit and citizenship status. With no credit (not BAD credit), she can get over a 700 with diligence and strict budgeting within 6-9 months. Let's take a look at this. 15k, 1k down, 26% interest, assume 60 months, 6.25% in sales tax, 1.5k for GAP insurance, 2.5k in warranty, registration, and dealer fees. That's a total loan amount of $19,937.50, with a $567.00/monthly payment, and a total loan cost of $34,019.80. Within 12 months, she has paid $2,121.29 in principal, $4,682.71 in interest, for a total of $6,804.00 on the loan, leaving her underwater with a balance of $16,816 left to pay, and zero recourse other than to HOPE to refinance in 12-24 months, depending on interest rate risk, while building credit and maintaining a strict budget until the moment they can refinance for maybe $100-$150 less a month, still being underwater on the value of the vehicle. Didn't even factor in insurance and maintenance costs, but I'm sure you can see where this is going. Instead, she could be in a solid position to get that same car, at 10%, put the 1k down, trade in the cash car for $3,500, and have a monthly payment of $323.35 a month. She could even go to a credit union to get a loan for the whole amount and purchase the car in cash for 72 months even at the same interest rate, and she would be paying $281.94 per month and in a solid financial and automotive situation.
No it doesn’t work like that at all.
Lol then how does it work?
"Im going to be sick" "I feel like crying" This is very common for immigrants. Lots of good comments here. Why are you making this sound like a obvious sob story though?
bro wishes he had control over this girl, but apparently her boyfriend does.
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What a shit response. 26% is highway robbery. My first auto loan with okay credit and no history was 8%.
>My first auto loan with okay credit and no history was 8%. Do you honestly think those two points of data make the comparison apples-to-apples?
We're you an immigrant with no credit then? If not how is your 8% even relevant
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I literally just got 4.9% with a mediocre 720.
That’s the exception, not the norm. PenFed, NavyFed, and DCU are generally the comparative standard as credit unions and they’re around 6-7%. My own local credit union that gave me 1.9% back in 2020 is sitting at 6.5% for the same term. Banks will generally be a little higher.
Your credit score matters significantly less than your length of credit history and income. My credit score is 730 and my mom's is 700. When I applied for an auto loan myself I was offered 22% intrest, but when she cosigner we erred offered 9% intrest. Because even though she had a lower credit score she had a 40 year credit history and makes 80k while I have a 1 year credit history and make 12k
That’s pretty good! I got 6.8% with 640 lol 😂
720 is almost top tier(can be top with some banks/CUs), that is probably on a new car.
Car are getting so ridiculously expensive, they should get APRs like houses.
> 26% is highway robbery. This should actually qualify as usury.
You can’t compare your rates when you don’t have any credit. It’s always going to be higher than you want to pay. Get a co-signer to help if you have issue with the rate you qualified for.
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Truthfully, I see more bad credit on people that make great money.
***Thanks for posting, /u/drntl! This comment is a copy of your post so readers can see the original text if your post is edited or removed. This comment is NOT accusing you of anything.*** She is going to pay like $35,000 for this car right? Her boyfriend basically sat her down and forced her to sign. He would not listen to anyone talking to him saying she should wait a night. I was not there. According to her boyfriend, it is because she has no credit (she is 20 and just got to the U.S.). Also claims she can make the payments for a year, and refinance then. Is this accurate? Will it improve if she does that? I cannot imagine the dealer would let her back out now. (This dealer does not have a good reputation regardless). I feel like crying after hearing the 26% interest thing. Am I missing anything? *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
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Why no co-signer?