I just got offered this for a $18k used car and when the salesman was explaining the terms, my eyes widened when he said that my monthly payments if i accept would be “$388 a month for 72 months”…. he continued by saying that it’s a normal rate… Im not like dave ramsey or anything but I have a grasp of what’s bad credit/debt wise and I feel like i’m already getting dunked on.
So unfortunate because the car is so nice…
am i crazy or is a 16% APR on a car loan with a 740 credit score bad….
byu/yuhuranusrings inpersonalfinance
Posted by yuhuranusrings
25 Comments
What can you get at your local Credit Union?
8.5% should be standard. Repos or payoffs? Chap 7? If the car is over 20yo sometimes extra 8nt.
Yes, that’s bad. They will offer as bad a deal as you’re willing to agree to.
Always shop for a car with a loan pre-approval from your bank or credit union. If the dealer can beat it, great. If not, you already have your financing deal.
id also like to add that im 20 and i cosigned for my sister’s car to which she’s about to refinance this month. I know that buying a cash car is better and i wish i could do that but many of the cash car in the area are being sold for 5k and its a disastrous shit box with 200k miles. i need something that will be reliable for me in the long run because I plan to use it until its last breath.
16% sounds pretty high for an asset-secured loan. Sounds like this salesman is trying to take advantage of (what they hope is) a low-knowledge buyer by having you focus on the monthly payment. 72 month car loans are insane IMO. Even more insane for something as small as $18k.
But don’t forget, credit score isn’t the only factor. Debt to income ratio plays a big factor. If you have limited income and/or already carry a lot of debt, that could drive up the lender’s risk with you as a borrower.
Why do you think the interest rate is so high?
Yes it is high. Used car rates are generally higher than new, but it is high for used. You can go to local credit unions or your bank and ask them to pre-approve you for a car loan, and then take that back to the dealer and see if they can lower it. Or see if your bank/credit union would allow you to refinance a used car loan (sometimes that depends on the car age/mileage). Or just straight up haggle. Tell them they need to come down on the APR or price.
Which credit score is 740? You have dozens of credit scores. What you’re looking at may not be the scoring model that lenders are using.
What’s the car in question? A lot of people don’t realize that the car also plays a role in the interest rate calculation.
That is a terrible rate. 6% new car and 9% used is average. New car loans go as low as 3% right now and used can get down to 6.5.
got 1% on my car purchase last week. 770 credit score.
Dealer is hoping you avoid doing math and instead focus on “less than $400 per month”. Run away.
It’s a bad rate. I do have a clarifying question though. Are you a built 740, or are you a first time buyer with a high score because you have thin credit history?
What lender are they using?
*** I see in another comment that you already have a car loan. That’s part of it I’m sure.
I went through my credit union a month ago. 4.79 for 4 years. Don’t take that dealers offer
Age of car, 100% financing and definitely make sure that co-signed loan is being paid on time. All of that can increase your rate.
16% IS CRAZY. Soon you’ll regret that. You know it.
6 years on a used car is pretty wild too.
$27,936
That’s what you’ll be paying for the $18,000 car, assuming minimum payments and on time. At least go on to capitalone and see if they have something better for you. Make the salesman work to beat something, because 16% is high. He’s dunking on you.
I got a car in November of last year. 780 credit score 6% for a used car. If you get a new car it can be lower.
Yes, it is bad. However, used cars have higher APR compare to new cars. Plus, longer pay period –72 months also increases the APR. Try to get approval from your credit union, or your bank before going to the dealer. Have that in your hand.
I would have walked and never looked back. Tell them crackers holla at ‘cha when they sober.
I got 20.99% approval on Carvana with a 590. And a 13.99% for my partner with a 710.
Do what you will with that information.
You’re better off getting a loan through your bank or credit union and paying thy dealer in full.
Capitol one has always given me great rates, I’d be checking everywhere besides the dealer
I got a new Kia last August at a dealership (CO, USA); 3 year term at 2.9%
Unless you urgently need a different car, you realistically have all the power to negotiate. At the end of the day, they want a sale
Used car with 740 FICO is probably about right.
Hell no. I bought a car 6 months ago with ~750 credit score. I got 5.5% APR on a 60 month loan.