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Beach4me

First Time Buyer Advice

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Hello,

 

My 22 yr old daughter is in need of a car. Her current car is too costly to fix considering all other factors. She just began a new job which is a much higher paying one but has only been there a month. She has tried a dealership and numerous other finance companies to qualify for a loan. She has been denied by all except for this one in which the used car dealer has provided. She has been denied because her credit score is slightly below 600, she has no credit history and the length on her job has been short. This dealer has a good reputation and specializes in first time car buyers. He has been very upfront and clear about the car and financing options.

 

She has found a 2014 Hyuandi Elantra with 24,000 miles with a negotiated price of $11,200. The kicker is the interest rate is 20%. I know this sounds insane but at this point she is between a rock and a hard place. The financing is with a loan company and not with the dealer so it will be reported to the credit bureaus.

 

Other than the interest rate being crazy, any other words of advice? Do you think she will be able to refinance in 6 months or is 12 more realistic? Of course this is provided all payments are made on time.

 

Thank you for all of your help!

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Who is the lender? Most likely she will not be able to refi in 6-12 months because the LTV will be too high.

First-time buyers as a group have an extremely high default rate and lenders price the loans accordingly.

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She needs to find a beater she can pay cash for while she builds up a Credit history. As Marv stated u will not be able to Refinance it 6 months. At 20% interest her payment would be going mainly to interest. I wouldn't do it she needs to start with some secured cards that graduate. Come over to main credit forum and post and we will help get her credit on track.

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When you can only get a high APR you need to have a budget to pay it off fast. It isn't too bad if you pay off in 2 years. People with five or 6 year loans at 20% APR are likely to be upside down the whole length of the loan, including that really awkward time when the car breaks down and you need a new one, before it is paid off.

 

Also of course check the price of the car against used car price sites.

Edited by mk_378

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When you can only get a high APR you need to have a budget to pay it off fast. It isn't too bad if you pay off in 2 years. People with five or 6 year loans at 20% APR are likely to be upside down the whole length of the loan, including that really awkward time when the car breaks down and you need a new one, before it is paid off.

 

Also of course check the price of the car against used car price sites.

I was about to say I thought anything over $10k was too high for ANY used Hyundai, much less a three year old one.

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When you can only get a high APR you need to have a budget to pay it off fast. It isn't too bad if you pay off in 2 years. People with five or 6 year loans at 20% APR are likely to be upside down the whole length of the loan, including that really awkward time when the car breaks down and you need a new one, before it is paid off.

 

Also of course check the price of the car against used car price sites.

I was about to say I thought anything over $10k was too high for ANY used Hyundai, much less a three year old one.

 

 

Tell me about it!

 

Hyundai's depreciate way fast, like 50% in the first year fast, but I'm on my third one now. They are good cars and their warranty pretty much covers whatever will go wrong with it.

 

I just got into a '17 Sonata and love it. Way better than my '11. They were having some great consumer cash deals so I pounced and got a semi-decent interest rate.

 

Didn't mean to de-rail the thread. Sorry about that OP.

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When you can only get a high APR you need to have a budget to pay it off fast. It isn't too bad if you pay off in 2 years. People with five or 6 year loans at 20% APR are likely to be upside down the whole length of the loan, including that really awkward time when the car breaks down and you need a new one, before it is paid off.

 

Also of course check the price of the car against used car price sites.

I was about to say I thought anything over $10k was too high for ANY used Hyundai, much less a three year old one.

 

 

Tell me about it!

 

Hyundai's depreciate way fast, like 50% in the first year fast, but I'm on my third one now. They are good cars and their warranty pretty much covers whatever will go wrong with it.

 

I just got into a '17 Sonata and love it. Way better than my '11. They were having some great consumer cash deals so I pounced and got a semi-decent interest rate.

 

Didn't mean to de-rail the thread. Sorry about that OP.

 

50% lol what is your LTV as of today?

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When you can only get a high APR you need to have a budget to pay it off fast. It isn't too bad if you pay off in 2 years. People with five or 6 year loans at 20% APR are likely to be upside down the whole length of the loan, including that really awkward time when the car breaks down and you need a new one, before it is paid off.

 

Also of course check the price of the car against used car price sites.

I was about to say I thought anything over $10k was too high for ANY used Hyundai, much less a three year old one.

Tell me about it!

 

Hyundai's depreciate way fast, like 50% in the first year fast, but I'm on my third one now. They are good cars and their warranty pretty much covers whatever will go wrong with it.

 

I just got into a '17 Sonata and love it. Way better than my '11. They were having some great consumer cash deals so I pounced and got a semi-decent interest rate.

 

Didn't mean to de-rail the thread. Sorry about that OP.

50% lol what is your LTV as of today?
I shudder to think.

 

I'm not even going to look since I have no plans on trading but I guess it's somewhere in the mid 100's.

 

Sent from my SM-G930T using Tapatalk

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I just bought a 2015 Kia withh 12k miles for roughly 50% of its original msrp

So unless the Elantra was fully loaded I tend to think that price was too high but you're not going to do well on interests rate with no credit history and no cosigner.

She might actually do better with a new one as long as she's willing to keep it for the term of the loan.

Edited by nq

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Hello,

 

My 22 yr old daughter is in need of a car. Her current car is too costly to fix considering all other factors. She just began a new job which is a much higher paying one but has only been there a month. She has tried a dealership and numerous other finance companies to qualify for a loan. She has been denied by all except for this one in which the used car dealer has provided. She has been denied because her credit score is slightly below 600, she has no credit history and the length on her job has been short. This dealer has a good reputation and specializes in first time car buyers. He has been very upfront and clear about the car and financing options.

 

She has found a 2014 Hyuandi Elantra with 24,000 miles with a negotiated price of $11,200. The kicker is the interest rate is 20%. I know this sounds insane but at this point she is between a rock and a hard place. The financing is with a loan company and not with the dealer so it will be reported to the credit bureaus.

 

Other than the interest rate being crazy, any other words of advice? Do you think she will be able to refinance in 6 months or is 12 more realistic? Of course this is provided all payments are made on time.

 

Thank you for all of your help!

 

Whats the story with the broke down car? Age mileage whats actually wrong with it? You'd be surprised a lot of repairs like say a timing belt which might sound intimidating to a novice and be expensive at a mechanic, are cheap and fairly easy to fix at home, as long as its not an interference motor. Whether its you, her boyfriend or some cheap crack head mechanic off craigslist someone should at least take a stab at it before you scrap it. I mean whats the worst that can go wrong you break it worse? If you don't want to do that I'd bet the repairs even at a mechanic are cheaper than getting a car with a 20% interest rate. Another great option is public auctions, around here you can get running cars for less than $500 and the auctions run every week with multiple options every week.

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She needs to find a beater she can pay cash for while she builds up a Credit history. As Marv stated u will not be able to Refinance it 6 months. At 20% interest her payment would be going mainly to interest. I wouldn't do it she needs to start with some secured cards that graduate. Come over to main credit forum and post and we will help get her credit on track.

+1

 

A beater is the best from a financial point of view. If it is possible then use mass transit to get to work.

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