21% Interest on Auto Loan?

[F1aReD]

First of all, my wife has terrible credit. She was in the market for a new car and was going to have her sister co-sign on the loan. (Her sisters score was in the 640s range), so she could even get approved for a loan at all and also have a decent rate.

 

When it was all said and done, the salesperson came back with her sisters score-and to our shock it was 529!! And my wifes is 534. So they offered us 21% financing. I know that's not even reasonable, but has anybody ever heard of that or seen someone pay that much? Can't they do a little better?

 

The crazy part is, her sister just got a used car a few months back, 5 yr loan with 3% interest. She also has a Macys card. I don't understand how it could drop by 100 points in a few months.

 

 

[Clydesmom]

Why are you not co-signing or financing the car for your wife?  It doesn't seem right that her sister is the one doing this and she would be INCREDIBLY foolish to do so.

 

When it was all said and done, the salesperson came back with her sisters score-and to our shock it was 529!! And my wifes is 534. So they offered us 21% financing. I know that's not even reasonable, but has anybody ever heard of that or seen someone pay that much? Can't they do a little better?

 

With credit scores that low I am surprised they are offering financing at all.  With scores below 600 21% is actually quite generous.  They are taking a MAJOR risk as those are high risk scores.

 

The crazy part is, her sister just got a used car a few months back, 5 yr loan with 3% interest. She also has a Macys card. I don't understand how it could drop by 100 points in a few months.

 

THAT is why her sister's score is depressed at the moment.  Her debt to income ratio just increased with the new loan and in the process of applying for her loan she got several hard pull credit inquiries then she added a bunch more with applying again for another loan.  She also only has one other positive trade line which will keep scores down and you don't say what other negative information is reporting too.

 

I have seen scores drop by 100 points just by applying for a lot of credit in less than a month.  

[admin]

It's not uncommon for interests rates to be that high with credit scores like that.  I've seen even higher.  

 

I don't know what made your sister in law's credit drop that much but it sounds like it's time to pull her credit and look for suspicious activity.  

[F1aReD]

I'd love to co-sign for my wife, but I have a (paid) charge off in my file, which is the only thing I have.  I have so little credit it won't even produce a Fico score. Yet, I can't get approved for anything to build it up, because of the charge off. Damned if I do, damned if I dont. I guess the next thing to try is a secured card.

 

I'm surprised they offered financing too.

 

Is there anything my sister in law can do? Or does she just have to wait until the hard inquries fall off? I haven't pulled her Fico score, but I could, to try and see what's going on.

 

The monthly payments were going to be over $600/month with all that interest. YIKES!

[willingtocope]

There are many different FICO scoring model.  The FICO New Car score depends more on past car purchases than anything else.  Why don't you try financing in your name.  You may be surprised.

[F1aReD]

There are many different FICO scoring model.  The FICO New Car score depends more on past car purchases than anything else.  Why don't you try financing in your name.  You may be surprised.

That's a funny joke. I can't even get a Target card.

[BV80]

@Clydesmom

 

Why are you not co-signing or financing the car for your wife?  It doesn't seem right that her sister is the one doing this and she would be INCREDIBLY foolish to do so.

 

That's really none of our business.  It's much nicer to make the suggestion as Willingtocope did rather than being quite so blunt.

[willingtocope]

That's a funny joke. I can't even get a Target card.

Not a joke.

 

FICO Bank Caed score ("the sucker score") determines if CC companies will make money off you.  The FICO New Car score determines if tou will make the payments.  Interest may be a little higher, but its not it might go thru.

 

Since the car loan is a secured loan, the FICO calculations are different.

[Clydesmom]

@Clydesmom

That's really none of our business.  It's much nicer to make the suggestion as Willingtocope did rather than being quite so blunt.

 

It is directly relevant since the OP's spouse is the one trying to buy a car and some states are community property states.  

 

Head over to any legal forum run by attorneys and read the number of threads by family who co-signed a car or house loan for a family member with terrible credit only to have them default and trash THEIR credit too.

 

Co-signing a loan is incredibly HIGH risk with good credit, with bad credit:  astronomically high risk and a spouse who cannot or will not do so is a GIANT red flag.  

 

When you don't get all the facts the answer is only as good as the information received.  If the OP had said they had a thin credit file other suggestions could have been made.  However, absent any details otherwise what the lack of information said was they had a bad credit file and were hiding that fact.

[nascar]

When you don't get all the facts the answer is only as good as the information received. 

 

I'll go one step further. Until one gets all the relevant facts, there shouldn't be an answer. 

[BV80]

@Clydesmom

 

It is directly relevant since the OP's spouse is the one trying to buy a car and some states are community property states.

 

I was referring to your question and comment in the form of a chastisement directed at the poster.   That was not relevant to the poster's question about the drop in his sister-in-law's credit score.

[F1aReD]

Clydesmom, your jumping to conclusions. Do you really think I'm so much of a jerk I wouldn't co-sign for my own wife? Maybe I should have included the reason why I wasn't co-signing, but like BV80 said, it wasn't relevant. My question was asking if anyone has ever heard of 21% financing and why my sister in laws credit dropped.

 

There was no facts to be given, the question was about my wife and her sister. Nothing to do with my credit and or me.

 

However, I will explain myself. I did try co-signing for my wife on a previous auto loan a few months ago, and of course we got denied. I have terrible credit & so does she, so theres no point in me co-signing, I would probably just lower her chances if anything, and she understands that.

 

I can't even get a secured credit card, it's really sad actually.

[admin]

@Clydesmom

 

 

I was referring to your question and comment in the form of a chastisement directed at the poster.   That was not relevant to the poster's question about the drop in his sister-in-law's credit score.

@BV80 - Thank you.