I bought a new VW Jetta last Friday and it is a wonderful car. I'll tell you my story. Also, I have some questions for anyone who's been in my situation. My Chap 7 Bk was discharged in September 2001. Shortly thereafter, I was able to obtain a Providian card with a $2000 credit limit and a 20% + APR. My FICO score as of 2/1/02 was 632. I needed a new car, and I needed to reestablish my credit. I figured I could accomplish both objectives in one sweep. I found a new Jetta I liked for $23,500, with tax. I didn't attempt to obtain credit on my own, because I didn't want to use any inquiries and be turned down. Instead, I went through the dealer, which seems to be a method recommended in this forum for people in my situation. I had $2000 to use as a down payment. The dealership found me financing through Houshold Auto Finance for the full amount less my downpayment, with an APR of 16.7 %. It's a high APR, but I didn't feel like I was in a any position to do better, because of my recent BK. I'll be making payments of around $500/month for the next six years. On the other hand, I won't be throwing money away on car repairs for the next 4 years, as I've been doing prior to the purchase. My questions, for anyone who's dealt with my situation are as follows: 1. After a year or so of making timely payments, does anyone think that Houshold Auto Finance will cut my APR if I let them know that I am going to try to refinance through another bank? 2. If not, does anyone think I'll be able to refinance through another bank after a year of timely payments? I'd be happy with a 10% APR, and I think that that is a good deal for any lender. I'll have no problem making the payments. In fact, I might elect to make higher payments each month, to try to compensate for the high APR. 3. Has anyone delt with Houshold Auto Finance before? Any problems? 4. I subscribe to Equifax Credit Watch, and noticed that there were 6 inquires on my report, as a result of my purchase. Apparently the dealership started at the top and worked their way down to find me a lender, despite the fact that I was honest with them upfront about my recent BK. I don't really feel that I autorized all of those inquires and I'd like to dispute them all with the exception of Household Auto and the Dealership. What do you think? I'd appreciate anyone's response who has been where I am before, as to any or all of my questions. Thanks.
Household's official policy is they do not re-fi their own loans, but maybe they make exceptions? I also bought a Jetta this summer and used Household, (well they were the only ones to finance me )
If you can improve your credit you can probably refinance through your own bank or credit union down the road. A 6 year car loan? Ouch. From the finance contract what does it say your total interest payments will be? As for the inquiries -- the credit scoring system is supposed to treat multiple auto loan inquiries within a short time period as a single inquiry for scoring purposes. There are various opinions on this board as to the truth of this practice. You can try to dispute them but at the very least you should call Equifax and make sure they are all coded as auto inquiries.
household won't budge. Refi is a touchy issue, they may refi your car but remember that you'll have to refi the "nada loan value" on the car. This is basically near trade-in value given options and wear and tear. loan value + high apr puts most people in a position of negative equity. You'll have to cut them a check for that amount at time of refi in most cases. Good luck! enjoy that dub!
One thing I have noticed is that most re-fi offers will only r-fi $7,500 and more, I will soon be under that limit, I wonder if I will have no ability to re-fi at all....
Total finance charge will be $13,327. That's a new car, in an of itself. In any case, I put myself in this situation . . . I discharged much more thant 13 K, I can make my payments, and I needed a car, so I'm still in a better position then prior to my BK.
Hey -- I did it to myself too so I feel your pain. I did tough it out with a four year loan though. I did five years once and regreted it big time. By the time I was four years into my five year loan I wanted to get out of that car very badly due to mechanical problems and there was nothing I could do. You shouldn't have that problem with your VW. You should see what the amortization looks like over four or five years though and try to send them the extra dough each month. Otherwise you're going to be upside down in that loan for most of the term.
Congrats on the new car! I bought a new VW Beetle and I LOVE it! I was truly fleeced on my rate. I was not very educated on credit when I went and I was certain I would not get approved. I went directly to the finance manager and made the mistake of letting her know my insecurities. I even had a cosigner with exellent credit and I got 17%!! Now that I know more, I realize my credit was not even that bad. My score at the time was 655. They took advantage and I had it coming for being so gullible. I have now refinanced without a cosigner through capital one. The rate still isn't great (10.95) but I am self employed and it always looks like I have a lot of debt since I use my cards for purchasing. I am sure you will be able to refi without a problem. In the meantime enjoy that awesome new car!!
Anyone have a link to a good amortization calculator? One that you can input a lump sum at a given point of time? Thanks.
RWB, Whats you income and time on Job situation look like. I'm only curious because I'm a fellow Ch7'er and I'd love to get something in the realm as my first financed car after BK. I'm usually partial to Japanese cars but you can't beat the suspention of German vehicles.
http://www.loanbright.com/edirectlending/calc_amortization.html MANY MORE AVAILABLE AT WWW.GOOGLE.COM IMPUT...amortization schedule...
Thanks George! I couldn't find one that would take my one time pre-payment... I found out that i will save 2.3 years off of my car loan! Sweet.
My income is $45,000. Been on the job 3 years. Really just starting out, after graduating with an advanced degree. My earning potential is pretty high, If I'd get of my ass and move into the private sector. Does that help?
Thank you George. The Amortization table shows that if I pay just $100 more a month, I'll save $3635.32 in interest, and I'll have my loan paid off a year and a half quicker. If I pay $200 more a month, I save $5648 and pay off my loan 2.4 years quicker. I think I'm going to start at $100 more a month. I'll have a couple hundred a month extra in August (I won't have to pay the BK trustee anymore for my extra property at that time). Then, I hope to pay $300 a month, and get this thing killed and my credit improved. It takes a computer to help my mathmatically-challenged mind understand the benefits of extra payments.
Do whatever you can to pay more than the minimum payment (go for 2X or 1.5X more per month, if possible) to eliminate the negative equity. In the meantime, work on improving your credit reports and establishing new positive tradelines (as many as you can). By the time you're ready to refi, you can look at a local bank or credit union as a first choice. A second choice would be Capital One Auto Finance or People First.Com. But after two years of good trades and hopefully real equity in the car - I think that you'd be a good choice for a local bank/credit union where you have access to the loan officer to explain the BK. I hope things work for you,
Ok... no offense to anyone here, but this is the sort of thing that truly makes me believe that our current credit rating system is severely flawed. Again, RWB, no offense, and congrats on getting the car. I find myself getting extremely frustrated, and yes, I'll admit, quite jealous of those folks who, 1-2 years post-BK, can obtain the credit that they need, albeit MAYBE (sometimes) at slightly higher rates. Honestly, it burns me more hearing about people post-BK obtaining nice credit cards with CL's that are higher than all of mine put together (4 cards = total of $1,450.) I made the mistake (it's how I view it now at least) of actually taking responsibility and struggling to pay off my bills, and yes, I did sacrifice some of the quality of life that I was used to. But I did it. I didn't know about this board, or some of the techniques available, but knowing now that all of my efforts (and $$$) went to fulfilling my obligations while STILL not doing a thing to undo the credit damage done, I wish I would've done something different. I've got one major unpaid bill left, which WILL be paid this year (friggin fraggin judgement that I might as well pay since it won't come off until 2005). Almost ALL of my negatives (all paid) are coming off by the middle of 2003 (most of them actually come off this year). And yet, I still can't get financed to buy a stick of gum. I've had Cap 1 for over 2 years now, with ONLY a $100 increase (still can't figure out who this Mr. Cooke guy is, or how to get a hold of him). Anyway, sorry to rant and rave like a lunatic.... I'm just really getting tired of thinking I see the light at the end of the tunnel, only to find out I mistakenly flew into the bug-zapper. A. J.
AJ, I understand your frustration. Believe me, I researched and contemplated all of my options prior to filing my BK. A friend of mine who is an attorney and who has been in the same situation confided in me that If I could get past the ethical dillema of filing a BK, I'd be in a better position than using any other method. My situation was such that I could make all of my monthly payments on my credit cards, and I often transfered the balances to obtain wonderful APRs. But once my student loan lender would not give me any further forbearances or deferments, I could no longer meet my monthly debts. I even pleaded with the Student Loan lender to give me one more year, and that I would look for a job in the private sector that would allow me to meet my debts. With my degree and job experience, I probably would have been able to find employment with a much higher income. I told them that a BK would be my only option if they refused. They refused, I filed BK, and I consolodated my student loan through the government with a much lower APR and a much lower payment. The way my friend explained it to me, after a BK, potential creditors would actually look at me more favorably than even before, when I thought I had excellent credit by paying my balances each month. Simply stated, I no longer have the liabilities that I had prior to my BK. On a side note, other than the higer APRs associated with filing a BK, there are other more subtle consequences that are haunting me. One big one is that I'm afraid to apply for certain jobs at the moment, for fear that the potential employers will find out about my BK. I just don't feel I would have the confidence to interview up to my full potential, because of the possibility that the employer would find out, mabe even after I am already hired. Consequently, I'm staying at my government job a little longer than I anticipated, in hopes that the negative karma generated through the BK will dissipate if I wait a while.
that is my fustration also. I struggled to not file bk when many folks advised me to it. did, i pay bills late, (yes) did i pay all my bills (no) but i tried everything in my power to deal with my financial situation w/o filing bk. Yes it is fustrating to see folks with post bk scores higher than mine, it hurts knowing that my interest rate on my home is Predatory and that my car loan apr is embarassing... however, i am glad that i found this board and that i have learned the value of many things during this challenge, money included !!
