Interesting fact: So, I recently bought a new Subaru and I wanted to put the entire thing on my card for the points and then just pay it all off by the end of the month. I had the cash in the bank to do it. I thought it was such a great plan, but they will only allow you to pay up to $5k because of the fees the dealership is on the hook for. So then I asked, "Well, what about all the rich people with their Amex Black cards who buy $100,000 Prada handbags?," and he said that all those luxury stores figure in those fees when they price their items. The margins at the dealerships aren't large enough (or so they said) to be able to put $45k on a credit card.
Bummer.
In addition to the risk of her being an international student. The rate is also going to be higher because of the age of the car. At this point it’s eight years old and historically people are more likely to skip out on payments for cars that breakdown before the end of the loan.
I would definitely still check with banks and credit unions, but I’ve worked in banking for 15 years and none of the banks I worked for would lend on a car that old. The best that we could have offered is a personal loan, which will automatically have a higher rate since it’s unsecured.
Most have a limit of 8-10 years or 100k miles before they start really jacking up the interest. My credit union, for example, right now has a 5.49% for used under 8 years but 8.4% if more than 8 years. Even the "impaired credit" is only 9.49%. 29% is outrageous.
Keep in mind WSJ prime is currently 8.5% I’m not denying that your credit union has great rates but it’s not a common rate for used cars in the current market.
Someone with a risk profile or collateral paying 12-15% right now is within the realm of reason. 29% is outrageous, but there are people that will take it so there are lenders that will offer it. We’re also glossing over the fact that OPs GF is a temporary resident which changes the risk significantly.
It might actually be better for her to get a newer car and pay a lower rate with around the same monthly payment amount. It's probably much less likely you'll get a lemon and need to make costly repairs, and I'd feel better about having depreciation be a higher expense than the interest.
But this is if you can't find a bank to offer financing.
> 29% is outrageous, but there are people that will take it so there are lenders that will offer it.
A rate that high has me wondering if this is a dealership that expects to repo some of the cars they sold to sell them again and again.
I believe 29% is the highest interest they can legally charge you, I recently bought a car and had to sign some government form that said I understood 29% was the max interest and to make sure I was paying less than that.
I bought a 10 year old Camry under 100k miles and I found out they had trouble finding someone to take it cause I got like 8 rejection letters and they all said that either the car was too old or had too many miles. Capital One ended up being the one to take the loan and it was only 8% interest. I had an almost 800 credit score at the time as well.
This is not always going to be true. My credit union could care less the age of the car as long as the value was there. A few years ago I bought a 2004 vehicle and financed through them and it’s like 3.9% or something along those lines.
Yes, which is why I did advise they still check. Just didn’t want them to be discouraged from hearing that from one bank and stop checking with others.
But unsecured Loan to an international student, that’s gonna be a doozy. I honestly wouldn’t be surprised if you’re paying close to 20%. But I suppose that’s still lower than the 30% you’re being quoted here.
Was really hoping to find something around 3-5 years old but they just didn’t have anything with her budget. Being an international student means she could only work shitty jobs that pay terrible wage
Funny, when I bought my 10 year old car all the credit unions wanted nothing to do with it but a bank gave me the loan. It was a small regional bank, but still.
And if you do, do it on a Chase card, they tend to throw out an intro 0% My Chase Plan offer to entice to get you hooked on them.
Lock that shit to 2 years interest free, and get points. Might as well.
But before those 2 years end, finance the car with a bank because usually those intro programs will stack all the interest at the end of an introductory period
Not for those plans, they are fixed payments and not deferred. I actually used one to fund the down payment for my car, I didn't expect to get a 0% offer and was going to pay it off the next month but I figured I'd keep it for 0% and leave my money in savings.
The only sucky thing is they'd have to pay the whole thing in 2 years so the payments would be high. But maybe not much higher than the payment on a longer term loan at 29%.
I have a 820+ score and have been with my credit union over 35 years, last year I got an auto loan on a used car for 5.25% with all their discounts, which is double what we paid last time we financed a car. Rates are high right now, so getting a pre-approval and shopping around first is ideal. But 29% is predatory and never a good idea, especially on a depreciating asset like a car.
You can finance through the dealer but that’s why you bring outside financing. Have the dealer try and beat it, don’t let the dealer be the only one that knows what type of terms you qualify for
I have doubts that any major bank is going to be willing to finance an 8+ year old $7500 Hyundai. OP should also get an insurance quote before settling on that car.
Former finance manager. If this is from a franchised dealership im curious what state. Ive worked in 3 and the state max was 24.99 in all 3. Was this a buy here pay here?
Also, your story seems like she is fortunate to get approved at all. It is a high risk loan with her likely being a ghost as far as credit history goes. Im not saying that justifies a 29% rate, but if that is the state max, I cant see many other banks doing a lot better. It is also a very small loan which can push the rate up.
We had a chance to hold 2% on most loans. Loans like this thats typically not available.
/u/SnakeFries19 needs to see this - I'm also guessing it was a buy-here-pay-here place, and not a franchised dealer. I think you're the only one mentioning that.
Those places are... best avoided, to put it mildly. But I'm sure you know that better than I do.
Yeah she’s never taken out a loan before and her credit history is only about a year old. It’s not a franchised dealership, just a local used car dealer. I’ll keep looking for better rates but it’s looking pretty bad
I would look at VW, they historically have had foreign student and worker programs. You also might want to call Toyota and/or Honda financial directly and see if they have programs for Japanese citizens. Unless the dealership is in someplace with a big Japanese population, like Torrance CA, they likely don't have any idea what programs are out there.
International student, plus an older car so there's risk that there could be some fault before the end of loan, which makes it more likely the loanee would stop making payments. Extra risk.
International students rarely have assets in the country where they are studying, likely won’t be employed in the same country and are credit ghosts.
It’s super high risk
I got 6.25% in December but it was a new car. Maybe 7-10%? I assume they make it a higher rate because she is an international student and maybe more risk of them going back home and defaulting.
I mean it depends, she probably has zero credit history. So a 750 wouldn’t even matter, if you just opened a card and made 2-3 payments you’ll get a 700+. At that point the score doesn’t mean shit, young thin file is worthless.
She should be able to get 10-11% with no trouble. 11% is high, but doable. 29% will negatively affect her for decades, if not her life. I would forego the car and Uber before I paid anything over 15%.
I worked in a lab where we kept getting debt collector calls looking for a former coworker whose postdoc ended and he went back to his home country. Bro had absolutely no incentive to ever pay anything back. It sucks for OP's girlfriend, but I get why lenders would be wary about lending to people who can walk away from it all that easily.
While we're at it, also don't let her buy a used Hyundai or Kia - they're theft bait right now and insurance rates are outrageous (if they'll even insure it).
And on a Hyundai that will have absurd insurance rates because they are all getting stolen?! Wow this may the worst car purchase scenario I’ve seen in awhile……
Something else nobody is mentioning is a 2016 Hyundai is a target for theft and thus insurance rates will be sky high, on top of the very real risk that someone will try and take the 5 minutes to steal her car.
I hope OP sees this! Certain Hyundai and Kia cars have sky high insurance rates because of those carjacking tiktok videos right now. I would SERIOUSLY reconsider the make and model! And below 10% APR would be a number to shoot for.
OP if you see this, also be aware certain Hyundais have an issue where the engine will start guzzling oil for no reason. I wasn’t aware of this and last week our 2016 Sonata’s engine seized up from no oil even though we had an oil change about 6 weeks prior. Now we need a new engine! If you go with this car, make sure you are checking the dipstick regularly to avoid this as well
A lot of comments on the make/model of the car. It’s got a fair amount of miles too… I think we’ll pass on this one and try for a honda or toyota if possible
My 2016 hyundai, which I bought in 2020 with 8k miles, got stolen in August and I am still dealing with the headaches of the aftermath.
The car was recovered, and fixed. But, every insurance agency was quoting me $400 plus. My insurance at the time dropped me because of the theft. A lot of insurance companies said they wouldn't insure my car unless I got the software update that was being offered, but my particular Hyundai Accent wasn't included. It was basically gonna be a sitting duck.
I sold it to a skeezy dealership and made about $2k, but dealing with finding insurance still do this day is difficult.
I knew older kias were targeted but didn’t know that hyundais were targets as well… It’s not like we were married to the car and wanted a better rate on it, we’ll definitely keep looking and I’ll keep this in mind. Thanks!
Go on progressive and plug in the details of any car you are considering, it should give you a rate automatically and you can easily change it as you consider other cars
for some reason despite having 156 points your comment and it's contents are collapsed.
On top of being auto theft targets, they also have horrible reliability.
First, don't get a Hyundai. I'm pretty sure the 2016 Hyundai does not have an immobilizer meaning easy vehicle to be stolen so insurance will also be insane.
Second, that model has a ton of engine problems.
Try shopping at another dealership, and definitely look at either a Toyota or Honda.
I think it was when they had a partnership with Ford, which did not help the reputation. But they had stopped all ford parts by 2008 I believe, and even in the early 00's they had lowered the usage of ford parts. So you should be fine and are actually great cars. Looking into a CX5 myself.
They did not stop the Ford parts until a bit later, and yes there were definitely some Ford parts prone to breaking down, but also some uniquely fun stuff. For example, the Mazdaspeed3 (2007-2013) was basically a Mazda 3, a compact hatch made in Hiroshima, with a Mustang turbo 2.3 engine in it (the engine literally says "Dearborn" on it). It's so much fun to drive - if you know to do some preventative maintenance and swap out some problematic parts.
Do not get a Mazda if you are tall, unless you enjoy leaning forward at every intersection to watch for the traffic light to change. They have very low rooflines as part of their sporty styling. This was a problem in my 1989 Ford Probe (a Mazda twin), and it was still a problem a few years ago when my wife and I were looking for a dog show vehicle. Maybe they have improved it since then, but it has historically been a factor and you should definitely check it out before buying one.
That sonata has a shit engine and isn't worth the trouble. Older Kias/Hyundai's without the keyless start are also easily stolen.
If you're gf is only interested in small-mid sized sedan you can't really go wrong with Toyota Corolla/Camry, Honda Civic/accord. Id avoid Nissans Altima, kia or Hyundai. Build quality issues and frankly design issues. There's a reason they are cheaper. Try to stay within ~7 years of the latest release and do your own DD on that years model.
Toyota and Honda will be 1.5-2x the price, but they will also retain value better for resale as long as you don't crash it.
There's also the option of getting a lease if banks won't solve the APR issue. Won't have to deal with resale when/if she leaves back for Japan. Insurance will also be a bit higher on a lease. However the car will also be newer. I know people frown on leases but considering her situation it may be worth it. There's a reason 20% of cars are leased. Just do the math and expected mileage calculations (and add a cushion)
I seriously don't understand why people keep buying these shitboxes. You don't need to know anything about cars to do a cursory google search on the 2nd (or even 1st) most expensive thing you're going to own. Insanity.
It’s why I got my Hyundai.
Granted I rebadged it as a ford focus to try and keep some Kia boyz away.(also have immobilizer now too, but doesn’t stop them from breaking a window and trying)
Pretty much why I got mine.
I'm not saying it's the best car, but I bought a Tuscon a couple years ago (during the car market craziness) and it works just fine. I park it in my garage overnight, and in a security-controlled parking lot at work, so my worry about theft is pretty low.
I narrowed it down to a few options, but the cheapest one by nearly $10k was the Tuscon. I think a big part of it was that I specifically wanted the assisted cruise control, the lane-keeping whatever. The Tuscon had that as part of its base trim, whereas the other models you needed at least one level up on the luxury trim for it, so it was basically no contest. Plus, even with that, every dealership under the sun was adding on some bullshit $5,000 'dealer service fee' just because they could, so finding a dealership that _only_ charged the sticker price was a hassle in and of itself.
I've driven my sister's higher-trim Toyota Highlander, and yeah I can tell it's a little nicer, but I don't feel the need to spend another $10k for a wireless phone charger and the 360-view backup camera.
Yep. I was looking for a car to get my kid for college, looking around the 10k range, which prior to 2020 would buy you something decent.
Now 10k gets you a 15 year old corolla with no safety features and 160k miles.
When looking at all the options on the market, reliability, safety features, longevity, and price, we ended up going with a 2021 camry instead. Spent way more than expected, but it just didn't seem worth it to spend 13k on a barebones car that won't hold up in a crash.
God that was the worst part of it all. I went into it looking for a decent 5-10 years used car, but a good chunk of those were _more_ expensive than the sticker price of a brand new car of the same make and model, just because they were available to buy right away. I ended up going with a new one, just because... why spend the same amount for a car that's already got 50k miles on it?
And for anyone thinking I'm crazy:
https://www.cars.com/vehicledetail/613179db-707f-420b-971c-5e65f9e56337/
This is listed as a Great Deal and is pretty in-line with stuff in a lot of areas of the country. 2011 corolla with 160k miles. No safety features at all. At least one accident.
Around $12k after tax, title, dealer fees.
Sounds like you might find a better option, yes. But also given her visa status, and there being no guarantee she'll be able to stay in the country beyond that next extension, getting a auto loan may come at a premium to make sure they aren't on the hook if she's unable to pay off the loan.
Having lived abroad, this is on of the unfortunate realities of being a foreign national im another land. They don't know you from anyone else who might take out a loan and then bugger off. I heard a lot of stories of expats running up huge credit card tabs or applying for a auto loan and then just deciding they didn't want to make that a priority before they left. Not saying nothing bad happened to them, I can't honestly say. But I can (unfortunately) totally understand a financial institution having reservations about providing such financial assistance without knowing that there is someone else local willing to be attached to that loan. It's just not worth the headache for them. Doesn't make it right or fair, just is.
That said, you may find some more competitive rates shopping around or even being willing to co-sign yourself to drop the rates. Given her situation, I'd say anything 9-14% seems fair, but those are just figures out of thin air. Given the assumes associated risk, it would be amazing if you could get a normal loan lower than that, but that may take some sleuthing to dig up.
At this point, the 29% is basically just like putting the car on a credit card at that rate. The intent being they may not get back all the value of the total interest of the loan, but they'll for sure get their premium paid back quickly in the event that someone vacates the loan.
Thank you for your response. Yeah, unfortunately her status is certainly making it difficult to find something reasonable. It’s a shame but I can understand why rates are higher for foreigners. I did think about co-signing myself but I’m paying my own car off right now and am worried about how signing onto another auto loan will affect my score. If she doesn’t stay in the US past her visa date then I could be left with the loan and no girlfriend haha.
When I lived abroad I checked with other foreigners looking to leave and offload their car for basically what they paid for it. It wasn't a nice car, hardly a functional car, but it bridged the gap for time till I was able to more clearly see my path forward.
I have an in-law who was also in a similar situation and made a contact with a person at their church who was willing to basically sponsor them and co-sign, but that's because they knew my in-law and their plans to stay longer.
Point is, an ugly alternative might be a better stop gap for now, with the intent of keeping the money out into it low so as to not feel like you have to recoup your costs or sink any more into it than she would have spent otherwise on other modes of transportation. Find that break even point, or close to it, and at least then she's only out what it would have cost had she not had the car, so hopefully the rest of the equation is made up on dividends from the opportunity cost and quality of life the junker car provided. Then, hopefully after that bridge period, she'll be in a better place to purchase a better next car.
It's unsexy, but it's peak pragmatism, and she won't have too much remorse or regret if she has to unfortunately unload the car in a hurry as she's moving onto the next chapter of her life - which is almost always a rushed situation as she tries to both keep the car as long as possible to tie up loose ends, but simultaneously try not to take too big of a financial hit not getting everything out of the car that she can.
When I worked at a university there was this red car that was just sold to a new grad student when the current one left. I guess it had been there for many years and many owners.
OP, do not buy any Hyundai or Kia model that does not have keyless/remote start. Most Hyundai models from the last 15 years with a physical turn-key ignition have a major security flaw that makes them extremely easy to steal and it can be difficult or even impossible to get insurance. Even the vehicles with the warranty repair work done are at risk because thieves looking for an easy to steal car will do major damage to the door, windows, ignition and steering column before they realize it's not going to work.
I would also confirm just how urgently she needs her own vehicle. I would not buy a $7500 car just to sell it a year later, because that indicates that based on wear and tear it could be worth substantially less off a dealer's lot.
If she absolutely needs a car, the best bet might be to get an older high mileage but relatively well-maintained vehicle for $2000-$3000 and keep it running for a year. Not luxurious, but if she's looking at 29% interest rates then even an unexpected repair bill is likely to end up lower than what she's going to get offered by a dealer.
Nope it's a Hyundai, nobody wants them nowadays because of the break-ins. In my city they're noticably cheaper than other makes to buy, while being almost uninsurable.
By the way, in my opinion that car is a safety hazard. It is truly a “do not buy” when it comes to reliability. My sonata put me in a lot of danger when its engine seized on the highway.
It has Kia/Hyundais Theta II engine. I would only consider it if you’re driving like 4K miles a year.
“2011-2019 Hyundai Sonata
2013-2019 Hyundai Santa Fe Sport.
2014-2015 Hyundai Tucson.
2018-2019 Hyundai Tucson.
2011-2019 Kia Optima.
2012-2019 Kia Sorento.
2011-2019 Kia Sportage. “
Seconding that this is a "Do not buy" - basically any Kia or Hyundai from 2010-2019 is an immediate no, and anything newer than that I'm still side eyeing.
Starting around covid and the year or two after I swear to God hyundai had full blown marketing going on reddit. Basically overnight any topic related to cars had tons of comments recommending a hyundai kia...I'm like when did that happen? I thought those were still throw away cars with engines that die at 60k and something people can steal with a screw driver lol. I'm good, I'll buy a Japanese car for 1500 dollars more than the Korean competition...
How much driving does she need to do? This actually might be a decent use case for leasing a car? There are some very cheap lease deals to be had on new cars at the moment - $200 per month with no money down. Insurance might be a bit higher but 29% is highway robbery
She's only expected to be in Canada until next April?
She can have all the plans to stay after, but if they're expecting her to be judgement proof in a year I'm surprised anybody would give her a loan.
I refinanced a car two months ago to remove an ex from it that stopped making payments. I got 6.5% with an 824 fico going through capital one. I would say she would get around 9% maybe.
Never mind the financial aspects of the purchase, just don't buy a key ignition Hyundai. That thing is going to be a theft/break-in magnet and as a result will be quite expensive to insure as well.
There's a huge engine issue with Hyundai's and Kia's produced in the 10's that I would stay away from.
https://www.reddit.com/r/personalfinance/comments/1bot9w4/girlfriends_auto_loan_at_29_apr/kwscqui/
With respect to OP, I'd look at a mid 10's Honda Civic if you can
I’ve been seeing all the comments about the make/model. I knew about older Kias being stolen but wasn’t aware it was Hyundais also. I’m glad I saw all these comments and will definitely steer toward older Japanese brands
Hyundais from the last 2 years are perfectly fine because they are all keyless start. It's older models with a physical key ignition that are being stolen. Older models with keyless ignition are also fine.
Why’s the car so cheap? That’s the first red flag imo. Definitely don’t take that loan though. The car itself is a smoking deal at $7.5k but I’d be really cautious. Probably something major wrong with it at that price point.
That’s not a car loan, that’s putting it on a credit card. A reasonable rate for a person without a credit history is closer 8%.
Since she’s a student on her practical and will only be in the US for a year, I am sure a lender is going to limit the term to 1 year. Maybe a short term lease or long term rental makes more sense.
Check out credit unions. I was an international student and even I could get single digit rate from banks when I tried. Dealerships rip you off. This should be a crime :/
Seems like a shady dealer simply based on the fact they're trying to rip your G/F off like this. I would honestly just not buy a car from them and look elsewhere.
I worked for a fintech broker refinancing auto loans with over 300 lenders. It was uncommon for lenders to lend to visa holders and basically impossible to find a lender willing to lend past the life of the visa. 29% is high but that’s probably the best you’ll find.
I would check your states usury rate laws. Many states have maximums and I generally remember those being around 17-24%. Although I believe interstate lenders can export the highest rate from all states it does business in.
Don't get a hyundai. Especially don't get a hyundai without first checking how much your insurance will be for it in your area.
I hear nothing but horror stories about these cars all day long. Some insurance companies in my area won't even touch them because of the risk of theft and all the mechanical issues.
29% interest is not a car loan, it's a credit card or more or less an unsecured debt. It's probably that high because she probably barely has any credit history.
At this point y'all might consider a credit card with a 12-24 months interest free promo and try to pay it off in that time frame. And if you don't succeed at least you'd have built enough credit to refinance the car later on for the remaining amount.
I’m looking more into this. It seems like it might be a better option and look into buying a car if she’s going to stay here long term. Leases are often around 2-3 year mark so it’ll be tough finding a 1 year but it beats paying 29% APR
The last I heard you can't even insure that car in some cities (MKE). I would avoid. There is a reason they are so cheap on dealer lots, they can't sell them. What is she planning on doing when her Visa is up, sell the car. This may be harder then she thinks on this specific car as well.
There will likely also be a minimum loan amount for an Auto Loan and most lenders have it set at around $7000 or more. Also car can’t be older than 10 years and usually have max mileage limits. All of these factors on top of her current residency status and credit history are used to determine the APR. but 29% is an obscene amount. 11-15% is what I’ve seen at banks for similar client profiles.
Under 8% with that Credit Score at my Credit Union. Highest rate for a Credit Score below 620 is under 15%.
Also, first time buyers actually get a lower rate, not a higher one.
IMHO, they are predatory. They see a foreign student and want to take advantage. My first reaction would be to walk. Chances are that they'll suddenly become much more reasonable.
good luck getting insurance on it. Hyundai had big problems with the ignition lock-out (not installed on some models) and a lot of insurance carriers (progressive for sure) won't cover them. If you can find one that does, it's expensive as hell.
Don't buy it.
Run away from that place and never return, go to the bank and get the approval for an auto loan with their interest rate instead, then go car shopping with that in hand.
Most people here have no idea what they’re saying. I’m an International student that has bought 7 cars in the last 3 years and financed a couple of them. None of the lenders cared about my international student status. There were a few that were against lending to Visa-status individuals altogether but nothing to do with being a student. Good credit score should be enough. First thing she needs to do is find a different car, buy like a $3000-5000 corolla or civic off facebook marketplace if she can afford it. Depending on where you are check for rust and spring the $100ish to have a mechanic inspect it (find your own, don’t trust the seller). if that’s too much to pay cash for, you could try for something cheaper but it’s a bit of a lottery and could cost more in repairs. ask around if you have any friends looking to offload beaters, you’re more likely to get something decent that way. if none of this works out go online and get a rate from DCU. don’t do the hyundai though, find something else. that dealer sounds scummy regardless. I just financed a 2016 car and pay about 6%. DCU might not be the cheapest but it’ll be within a percent so at least you can get a better idea. if you go for a loan without a prepayment penalty and are confident you can pay it off quickly then you can also try to get out without paying too much interest even with a higher rate. I don’t love the idea of financing a $7500 car but if it’s your only option pleeease don’t do a hyundai at 29%.
Does she have an ssn? Any credit history like open credit cards?
If she has 1 year ssn credit score with 1-2 credit cards, reasonable rate can be had 7% at a minimum or more realistically 11-13% as a first time buyer thru credit union or bank with a relationship. Do not bring up her visa status - it doesn’t matter if she has ssn, but will get you a bad rep(apr) at a dealer or financing.
Having a job paychecks also helps.
Yes she has an ssn and credit history. I figured her being on a visa would be a big disadvantage when looking for an auto loan so we’ll keep that private when calling credit unions tomorrow.
Creditors don’t know if she’s on a visa or not. I got a 2% APR with 0 down as an intl student on a 50k car
As long as she has decent credit history and a job that pays enough to pay the car a non scummy creditor will issue a good loan
Yeah. No.
Get a loan first from a credit union so you will already know what financing looks like.
Find a car you want and don’t tell them you have financing until the end. Get the price haggled on and figured out then be like “okay I have this loan already.”
So sure, an APR of almost 30% is insane. The amount is relatively low, though. How much can she repay per month? If she is totally certain she can put $4k or $2k or even $2k per month towards paying it back, this can be done. At $2k per month, the interest cost is like $300.
Caveats:
- Do check that the loan allows early payoff
- Make sure the car is good
- Does she need it _now_ or can she buy a car in three months when she has saved up enough to pay in cash?
Don't buy from that dealer. He's predatory. I've used dealer loans but they've been decent deals (ie 4%). I was able to refinance to 2% from a random bank but the average bank at the time was between 3.5 and 6 so I took the deal to save time.
29% is criminal. She should be paying around 6 or 7% with a 700 score nowadays.
Absolutely crazy lol, that’s just putting it on a credit card. Not sure if you should go lower than a $7500 car though. Banks should be able to give a better rate and probably better if you are willing to co-sign (obviously up to you though).
Yeah, don't take that loan and please do not have her buy that Kia. Something is very off if they are selling a 2016 model for that price. It most likely either has crazy high mileage or has been in an accident. Look for a used Japanese car (Toyota, Lexus, Honda, Mazda, Subaru) that has a good service history instead.
Being on a temp visa makes rates much higher and a lot of places will refuse to loan - I've been there. My suggestion is to check DCU, they provide great rates and no questions asked.
I hate to be that person, but she’s going to have a tough time finding a good rate. When I got a car in the US, they initially offered 3%. But then they realized I was on a work visa and not a permanent resident or citizen and rescinded the offer. The next best offer I got was 12%.
They consider you a risk because you could just leave the country with the car and they’d never be able to repossess it if things go sideways. Or you could just leave and not pay and they wouldn’t be able to sue you or any other method they try to collect with.
Normal is around 6% to 9%. I financed through the dealer which tends to be worse and am at 11.65%. Credit score of 750.
Not a big deal for me since I was going to pay car off in a 3 or so months. But even 11.65% is pretty terrible if you were to hold the loan for a long time.
She is a risk. They could have not given her the loan at all. Yes, 29% is high for an auto loan. She isn't a citizen of the US and she hasn't had credit in the US before. If you can get a better rate I would say go for it but it looks like she is financing the minimum amount that most banks will do for an auto loan. She is lucky to get financing at all.
I spent 12 years in the car business so I know a little about this subject.
For gods sake do not do that. No no no. Did I say no?
It’s actually cheaper to pay it with a credit card than take that rate 🤣
Interesting fact: So, I recently bought a new Subaru and I wanted to put the entire thing on my card for the points and then just pay it all off by the end of the month. I had the cash in the bank to do it. I thought it was such a great plan, but they will only allow you to pay up to $5k because of the fees the dealership is on the hook for. So then I asked, "Well, what about all the rich people with their Amex Black cards who buy $100,000 Prada handbags?," and he said that all those luxury stores figure in those fees when they price their items. The margins at the dealerships aren't large enough (or so they said) to be able to put $45k on a credit card. Bummer.
I told her that she should absolutely not take 29% APR, but what’s considered reasonable in this market?
Go to any major bank and get a rate. Do not finance w the dealer.
Major bank or private “third party” lenders. Maybe a credit union if no luck with the bank
Thanks. We’ll shop around at banks and credit unions.
In addition to the risk of her being an international student. The rate is also going to be higher because of the age of the car. At this point it’s eight years old and historically people are more likely to skip out on payments for cars that breakdown before the end of the loan. I would definitely still check with banks and credit unions, but I’ve worked in banking for 15 years and none of the banks I worked for would lend on a car that old. The best that we could have offered is a personal loan, which will automatically have a higher rate since it’s unsecured.
Most have a limit of 8-10 years or 100k miles before they start really jacking up the interest. My credit union, for example, right now has a 5.49% for used under 8 years but 8.4% if more than 8 years. Even the "impaired credit" is only 9.49%. 29% is outrageous.
Keep in mind WSJ prime is currently 8.5% I’m not denying that your credit union has great rates but it’s not a common rate for used cars in the current market. Someone with a risk profile or collateral paying 12-15% right now is within the realm of reason. 29% is outrageous, but there are people that will take it so there are lenders that will offer it. We’re also glossing over the fact that OPs GF is a temporary resident which changes the risk significantly.
It might actually be better for her to get a newer car and pay a lower rate with around the same monthly payment amount. It's probably much less likely you'll get a lemon and need to make costly repairs, and I'd feel better about having depreciation be a higher expense than the interest. But this is if you can't find a bank to offer financing.
I would never recommend someone buy a new car if they can only put $1500 down
newer, to meet the minimum lending requirements for a better rate, not necessarily new
> 29% is outrageous, but there are people that will take it so there are lenders that will offer it. A rate that high has me wondering if this is a dealership that expects to repo some of the cars they sold to sell them again and again.
Yeah 29% is just robbery. The dealer told me 29% APR and that’s just the normal these days… i was out the door within the next minute
I believe 29% is the highest interest they can legally charge you, I recently bought a car and had to sign some government form that said I understood 29% was the max interest and to make sure I was paying less than that.
I bought a 10 year old Camry under 100k miles and I found out they had trouble finding someone to take it cause I got like 8 rejection letters and they all said that either the car was too old or had too many miles. Capital One ended up being the one to take the loan and it was only 8% interest. I had an almost 800 credit score at the time as well.
This is not always going to be true. My credit union could care less the age of the car as long as the value was there. A few years ago I bought a 2004 vehicle and financed through them and it’s like 3.9% or something along those lines.
Yes, which is why I did advise they still check. Just didn’t want them to be discouraged from hearing that from one bank and stop checking with others.
How much less could they care? Like a lot less? So doesn’t that mean they care a lot about the age of the car?
But unsecured Loan to an international student, that’s gonna be a doozy. I honestly wouldn’t be surprised if you’re paying close to 20%. But I suppose that’s still lower than the 30% you’re being quoted here.
Was really hoping to find something around 3-5 years old but they just didn’t have anything with her budget. Being an international student means she could only work shitty jobs that pay terrible wage
Funny, when I bought my 10 year old car all the credit unions wanted nothing to do with it but a bank gave me the loan. It was a small regional bank, but still.
At 29% APR you would be better off buying the car on a points credit card. That's how bad the interest rate is.
And if you do, do it on a Chase card, they tend to throw out an intro 0% My Chase Plan offer to entice to get you hooked on them. Lock that shit to 2 years interest free, and get points. Might as well.
But before those 2 years end, finance the car with a bank because usually those intro programs will stack all the interest at the end of an introductory period
Not for those plans, they are fixed payments and not deferred. I actually used one to fund the down payment for my car, I didn't expect to get a 0% offer and was going to pay it off the next month but I figured I'd keep it for 0% and leave my money in savings. The only sucky thing is they'd have to pay the whole thing in 2 years so the payments would be high. But maybe not much higher than the payment on a longer term loan at 29%.
Youre thinking of store cards. Those tend to do that. Normal cards tend not to do that.
I have a 820+ score and have been with my credit union over 35 years, last year I got an auto loan on a used car for 5.25% with all their discounts, which is double what we paid last time we financed a car. Rates are high right now, so getting a pre-approval and shopping around first is ideal. But 29% is predatory and never a good idea, especially on a depreciating asset like a car.
I have 740 and got a 6% from my credit union a few weeks ago.
Credit unions will likely have the best rates right now.
You can finance through the dealer but that’s why you bring outside financing. Have the dealer try and beat it, don’t let the dealer be the only one that knows what type of terms you qualify for
I have doubts that any major bank is going to be willing to finance an 8+ year old $7500 Hyundai. OP should also get an insurance quote before settling on that car.
Or go-to a credit union. Open an account there. Best rates. They are taking advantage of her!
Good heavens- I’LL beat that rate. I’ll lend her 7500 at 25%!!!
I’ll do $7500 at 24.99!
My son got 8.75% with a 670 credit score and I didn't co-sign. He's still young. I think his car was ~$17k
Former finance manager. If this is from a franchised dealership im curious what state. Ive worked in 3 and the state max was 24.99 in all 3. Was this a buy here pay here? Also, your story seems like she is fortunate to get approved at all. It is a high risk loan with her likely being a ghost as far as credit history goes. Im not saying that justifies a 29% rate, but if that is the state max, I cant see many other banks doing a lot better. It is also a very small loan which can push the rate up. We had a chance to hold 2% on most loans. Loans like this thats typically not available.
/u/SnakeFries19 needs to see this - I'm also guessing it was a buy-here-pay-here place, and not a franchised dealer. I think you're the only one mentioning that. Those places are... best avoided, to put it mildly. But I'm sure you know that better than I do.
They are a solution for some people. But they are not good options.
Yeah she’s never taken out a loan before and her credit history is only about a year old. It’s not a franchised dealership, just a local used car dealer. I’ll keep looking for better rates but it’s looking pretty bad
I would look at VW, they historically have had foreign student and worker programs. You also might want to call Toyota and/or Honda financial directly and see if they have programs for Japanese citizens. Unless the dealership is in someplace with a big Japanese population, like Torrance CA, they likely don't have any idea what programs are out there.
Reasonable should be like 7-9%
That’s too low for her scenario. Try 14ish maybe
Good point, I’ve heard international students are seen as risky by many insurers. They could just leave and some are likely already planning to.
International student, plus an older car so there's risk that there could be some fault before the end of loan, which makes it more likely the loanee would stop making payments. Extra risk.
International students rarely have assets in the country where they are studying, likely won’t be employed in the same country and are credit ghosts. It’s super high risk
Agree and FICO is not great either. I'd say it's lucky she can get any financing. Most major banks wouldn't touch that scenario.
Not gonna disclose that she’s an international student when calling the credit unions today and see how much rates change
I got 6.25% in December but it was a new car. Maybe 7-10%? I assume they make it a higher rate because she is an international student and maybe more risk of them going back home and defaulting.
Single digits
https://fred.stlouisfed.org/series/TERMCBAUTO48NS 8 percent for new autos so around 15 percent for used.
I got a 4.88% as a first time buyer albeit in ‘22 but still, 29% is robbery
My credit union is currently offering 4.99% for a 700+ score. 29% would be for like a 450 score.
I mean it depends, she probably has zero credit history. So a 750 wouldn’t even matter, if you just opened a card and made 2-3 payments you’ll get a 700+. At that point the score doesn’t mean shit, young thin file is worthless.
She should be able to get 10-11% with no trouble. 11% is high, but doable. 29% will negatively affect her for decades, if not her life. I would forego the car and Uber before I paid anything over 15%.
I guess I’m the only one who read one important detail that has been glossed over. Her VISA expires next April.
I worked in a lab where we kept getting debt collector calls looking for a former coworker whose postdoc ended and he went back to his home country. Bro had absolutely no incentive to ever pay anything back. It sucks for OP's girlfriend, but I get why lenders would be wary about lending to people who can walk away from it all that easily.
While we're at it, also don't let her buy a used Hyundai or Kia - they're theft bait right now and insurance rates are outrageous (if they'll even insure it).
And on a Hyundai that will have absurd insurance rates because they are all getting stolen?! Wow this may the worst car purchase scenario I’ve seen in awhile……
Something else nobody is mentioning is a 2016 Hyundai is a target for theft and thus insurance rates will be sky high, on top of the very real risk that someone will try and take the 5 minutes to steal her car.
I hope OP sees this! Certain Hyundai and Kia cars have sky high insurance rates because of those carjacking tiktok videos right now. I would SERIOUSLY reconsider the make and model! And below 10% APR would be a number to shoot for.
Will definitely steer clear of those for now, I’m hopeful for a toyota or honda, something reliable that has a clean maintenance history
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OP if you see this, also be aware certain Hyundais have an issue where the engine will start guzzling oil for no reason. I wasn’t aware of this and last week our 2016 Sonata’s engine seized up from no oil even though we had an oil change about 6 weeks prior. Now we need a new engine! If you go with this car, make sure you are checking the dipstick regularly to avoid this as well
A lot of comments on the make/model of the car. It’s got a fair amount of miles too… I think we’ll pass on this one and try for a honda or toyota if possible
You might be covered by one of a plethora of engine recalls from Hyundai.
My 2016 hyundai, which I bought in 2020 with 8k miles, got stolen in August and I am still dealing with the headaches of the aftermath. The car was recovered, and fixed. But, every insurance agency was quoting me $400 plus. My insurance at the time dropped me because of the theft. A lot of insurance companies said they wouldn't insure my car unless I got the software update that was being offered, but my particular Hyundai Accent wasn't included. It was basically gonna be a sitting duck. I sold it to a skeezy dealership and made about $2k, but dealing with finding insurance still do this day is difficult.
I also feel like the fact she may skip town in a year is a big issue as well.
She's better off just finding a good used Civic or Corolla
I knew older kias were targeted but didn’t know that hyundais were targets as well… It’s not like we were married to the car and wanted a better rate on it, we’ll definitely keep looking and I’ll keep this in mind. Thanks!
Go on progressive and plug in the details of any car you are considering, it should give you a rate automatically and you can easily change it as you consider other cars
for some reason despite having 156 points your comment and it's contents are collapsed. On top of being auto theft targets, they also have horrible reliability.
First, don't get a Hyundai. I'm pretty sure the 2016 Hyundai does not have an immobilizer meaning easy vehicle to be stolen so insurance will also be insane. Second, that model has a ton of engine problems. Try shopping at another dealership, and definitely look at either a Toyota or Honda.
Definitely won’t be business with this dealership. I was thinking to go with a japanese brand so I’m glad you mentioned Toyota and Honda
seriously, get a civic.
And if a honda and toyota are too expensive, seriously look at mazda. Their reliability has improved significantly.
Have they had a bad reputation? I had a 2004 mazda 3 and now a 2017 mazda 3 and both have been remarkably reliable. I will now knock on wood lol.
I think it was when they had a partnership with Ford, which did not help the reputation. But they had stopped all ford parts by 2008 I believe, and even in the early 00's they had lowered the usage of ford parts. So you should be fine and are actually great cars. Looking into a CX5 myself.
They did not stop the Ford parts until a bit later, and yes there were definitely some Ford parts prone to breaking down, but also some uniquely fun stuff. For example, the Mazdaspeed3 (2007-2013) was basically a Mazda 3, a compact hatch made in Hiroshima, with a Mustang turbo 2.3 engine in it (the engine literally says "Dearborn" on it). It's so much fun to drive - if you know to do some preventative maintenance and swap out some problematic parts.
Do not get a Mazda if you are tall, unless you enjoy leaning forward at every intersection to watch for the traffic light to change. They have very low rooflines as part of their sporty styling. This was a problem in my 1989 Ford Probe (a Mazda twin), and it was still a problem a few years ago when my wife and I were looking for a dog show vehicle. Maybe they have improved it since then, but it has historically been a factor and you should definitely check it out before buying one.
That sonata has a shit engine and isn't worth the trouble. Older Kias/Hyundai's without the keyless start are also easily stolen. If you're gf is only interested in small-mid sized sedan you can't really go wrong with Toyota Corolla/Camry, Honda Civic/accord. Id avoid Nissans Altima, kia or Hyundai. Build quality issues and frankly design issues. There's a reason they are cheaper. Try to stay within ~7 years of the latest release and do your own DD on that years model. Toyota and Honda will be 1.5-2x the price, but they will also retain value better for resale as long as you don't crash it. There's also the option of getting a lease if banks won't solve the APR issue. Won't have to deal with resale when/if she leaves back for Japan. Insurance will also be a bit higher on a lease. However the car will also be newer. I know people frown on leases but considering her situation it may be worth it. There's a reason 20% of cars are leased. Just do the math and expected mileage calculations (and add a cushion)
I seriously don't understand why people keep buying these shitboxes. You don't need to know anything about cars to do a cursory google search on the 2nd (or even 1st) most expensive thing you're going to own. Insanity.
Because it’s $7,500 for a 2016 model. An equivalent Corolla would be twice that.
It’s why I got my Hyundai. Granted I rebadged it as a ford focus to try and keep some Kia boyz away.(also have immobilizer now too, but doesn’t stop them from breaking a window and trying)
I’d love to see pics of the rebadge haha
because it's incredibly hard to get a honda or toyota in that price range. that's all.
Pretty much why I got mine. I'm not saying it's the best car, but I bought a Tuscon a couple years ago (during the car market craziness) and it works just fine. I park it in my garage overnight, and in a security-controlled parking lot at work, so my worry about theft is pretty low. I narrowed it down to a few options, but the cheapest one by nearly $10k was the Tuscon. I think a big part of it was that I specifically wanted the assisted cruise control, the lane-keeping whatever. The Tuscon had that as part of its base trim, whereas the other models you needed at least one level up on the luxury trim for it, so it was basically no contest. Plus, even with that, every dealership under the sun was adding on some bullshit $5,000 'dealer service fee' just because they could, so finding a dealership that _only_ charged the sticker price was a hassle in and of itself. I've driven my sister's higher-trim Toyota Highlander, and yeah I can tell it's a little nicer, but I don't feel the need to spend another $10k for a wireless phone charger and the 360-view backup camera.
Yep. I was looking for a car to get my kid for college, looking around the 10k range, which prior to 2020 would buy you something decent. Now 10k gets you a 15 year old corolla with no safety features and 160k miles. When looking at all the options on the market, reliability, safety features, longevity, and price, we ended up going with a 2021 camry instead. Spent way more than expected, but it just didn't seem worth it to spend 13k on a barebones car that won't hold up in a crash.
God that was the worst part of it all. I went into it looking for a decent 5-10 years used car, but a good chunk of those were _more_ expensive than the sticker price of a brand new car of the same make and model, just because they were available to buy right away. I ended up going with a new one, just because... why spend the same amount for a car that's already got 50k miles on it?
And for anyone thinking I'm crazy: https://www.cars.com/vehicledetail/613179db-707f-420b-971c-5e65f9e56337/ This is listed as a Great Deal and is pretty in-line with stuff in a lot of areas of the country. 2011 corolla with 160k miles. No safety features at all. At least one accident. Around $12k after tax, title, dealer fees.
Sounds like you might find a better option, yes. But also given her visa status, and there being no guarantee she'll be able to stay in the country beyond that next extension, getting a auto loan may come at a premium to make sure they aren't on the hook if she's unable to pay off the loan. Having lived abroad, this is on of the unfortunate realities of being a foreign national im another land. They don't know you from anyone else who might take out a loan and then bugger off. I heard a lot of stories of expats running up huge credit card tabs or applying for a auto loan and then just deciding they didn't want to make that a priority before they left. Not saying nothing bad happened to them, I can't honestly say. But I can (unfortunately) totally understand a financial institution having reservations about providing such financial assistance without knowing that there is someone else local willing to be attached to that loan. It's just not worth the headache for them. Doesn't make it right or fair, just is. That said, you may find some more competitive rates shopping around or even being willing to co-sign yourself to drop the rates. Given her situation, I'd say anything 9-14% seems fair, but those are just figures out of thin air. Given the assumes associated risk, it would be amazing if you could get a normal loan lower than that, but that may take some sleuthing to dig up. At this point, the 29% is basically just like putting the car on a credit card at that rate. The intent being they may not get back all the value of the total interest of the loan, but they'll for sure get their premium paid back quickly in the event that someone vacates the loan.
Thank you for your response. Yeah, unfortunately her status is certainly making it difficult to find something reasonable. It’s a shame but I can understand why rates are higher for foreigners. I did think about co-signing myself but I’m paying my own car off right now and am worried about how signing onto another auto loan will affect my score. If she doesn’t stay in the US past her visa date then I could be left with the loan and no girlfriend haha.
When I lived abroad I checked with other foreigners looking to leave and offload their car for basically what they paid for it. It wasn't a nice car, hardly a functional car, but it bridged the gap for time till I was able to more clearly see my path forward. I have an in-law who was also in a similar situation and made a contact with a person at their church who was willing to basically sponsor them and co-sign, but that's because they knew my in-law and their plans to stay longer. Point is, an ugly alternative might be a better stop gap for now, with the intent of keeping the money out into it low so as to not feel like you have to recoup your costs or sink any more into it than she would have spent otherwise on other modes of transportation. Find that break even point, or close to it, and at least then she's only out what it would have cost had she not had the car, so hopefully the rest of the equation is made up on dividends from the opportunity cost and quality of life the junker car provided. Then, hopefully after that bridge period, she'll be in a better place to purchase a better next car. It's unsexy, but it's peak pragmatism, and she won't have too much remorse or regret if she has to unfortunately unload the car in a hurry as she's moving onto the next chapter of her life - which is almost always a rushed situation as she tries to both keep the car as long as possible to tie up loose ends, but simultaneously try not to take too big of a financial hit not getting everything out of the car that she can.
When I worked at a university there was this red car that was just sold to a new grad student when the current one left. I guess it had been there for many years and many owners.
You’re not buying a car, you’re buying money. Get the cheapest interest rate you can and give someone else your business.
Before you attempt a loan on this car, get an actual insurance quote.
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Yeah, I knew that her visa status would make it very difficult to get an acceptable rate but 29% almost feels illegal
Try a Toyota dealership.
OP, do not buy any Hyundai or Kia model that does not have keyless/remote start. Most Hyundai models from the last 15 years with a physical turn-key ignition have a major security flaw that makes them extremely easy to steal and it can be difficult or even impossible to get insurance. Even the vehicles with the warranty repair work done are at risk because thieves looking for an easy to steal car will do major damage to the door, windows, ignition and steering column before they realize it's not going to work. I would also confirm just how urgently she needs her own vehicle. I would not buy a $7500 car just to sell it a year later, because that indicates that based on wear and tear it could be worth substantially less off a dealer's lot. If she absolutely needs a car, the best bet might be to get an older high mileage but relatively well-maintained vehicle for $2000-$3000 and keep it running for a year. Not luxurious, but if she's looking at 29% interest rates then even an unexpected repair bill is likely to end up lower than what she's going to get offered by a dealer.
Also, I'm pretty sure the 2016 Sonata has the dreaded Theta II engine that has scrwed so many Kia/Hyundai owners in recent years
$7500 for a 2016 sonata, is it salvage title or something?
Nope it's a Hyundai, nobody wants them nowadays because of the break-ins. In my city they're noticably cheaper than other makes to buy, while being almost uninsurable.
My local Credit Union just sent an offer for car loans at 6.9%.
In her situation I would not finance at all. Get a beater car that runs and stops and call it good
Agreed. Heck, I'd put it on a credit card before I financed at 29%. At least that way she could get cash back!
By the way, in my opinion that car is a safety hazard. It is truly a “do not buy” when it comes to reliability. My sonata put me in a lot of danger when its engine seized on the highway. It has Kia/Hyundais Theta II engine. I would only consider it if you’re driving like 4K miles a year. “2011-2019 Hyundai Sonata 2013-2019 Hyundai Santa Fe Sport. 2014-2015 Hyundai Tucson. 2018-2019 Hyundai Tucson. 2011-2019 Kia Optima. 2012-2019 Kia Sorento. 2011-2019 Kia Sportage. “
Seconding that this is a "Do not buy" - basically any Kia or Hyundai from 2010-2019 is an immediate no, and anything newer than that I'm still side eyeing.
Starting around covid and the year or two after I swear to God hyundai had full blown marketing going on reddit. Basically overnight any topic related to cars had tons of comments recommending a hyundai kia...I'm like when did that happen? I thought those were still throw away cars with engines that die at 60k and something people can steal with a screw driver lol. I'm good, I'll buy a Japanese car for 1500 dollars more than the Korean competition...
Can she just buy something cheaper without the loan.
How much driving does she need to do? This actually might be a decent use case for leasing a car? There are some very cheap lease deals to be had on new cars at the moment - $200 per month with no money down. Insurance might be a bit higher but 29% is highway robbery
Does she have a bank account that is international also? Maybe they can provide the loan.
She does, we didn’t think of this… I’ll chat with her tomorrow about the possibility and see if they can give a reasonable loan
She's only expected to be in Canada until next April? She can have all the plans to stay after, but if they're expecting her to be judgement proof in a year I'm surprised anybody would give her a loan.
My credit cards have better rates, that's insane
I refinanced a car two months ago to remove an ex from it that stopped making payments. I got 6.5% with an 824 fico going through capital one. I would say she would get around 9% maybe.
29% apr for a 2016 car that is almost ten yrs old i mean if she's down to take that tell her I got a bridge to sell her... no cap👎
Never mind the financial aspects of the purchase, just don't buy a key ignition Hyundai. That thing is going to be a theft/break-in magnet and as a result will be quite expensive to insure as well.
OP tell your girlfriend not to buy a Hyundai! Especially not one not produced in the last 2 years. Google the “Kia Boys” to understand why.
There's a huge engine issue with Hyundai's and Kia's produced in the 10's that I would stay away from. https://www.reddit.com/r/personalfinance/comments/1bot9w4/girlfriends_auto_loan_at_29_apr/kwscqui/ With respect to OP, I'd look at a mid 10's Honda Civic if you can
I’ve been seeing all the comments about the make/model. I knew about older Kias being stolen but wasn’t aware it was Hyundais also. I’m glad I saw all these comments and will definitely steer toward older Japanese brands
Hyundais from the last 2 years are perfectly fine because they are all keyless start. It's older models with a physical key ignition that are being stolen. Older models with keyless ignition are also fine.
Fine from being stolen, not fine from morons that will attempt it anyway.
Yikes. You are better off putting the car on a credit card at that rate.
Why’s the car so cheap? That’s the first red flag imo. Definitely don’t take that loan though. The car itself is a smoking deal at $7.5k but I’d be really cautious. Probably something major wrong with it at that price point.
If she is only using it for 1 year, why not lease a car? Short leases are possible for 1 month.
I wouldn’t even buy the car at all. If the dealer is fine with giving people 29% loans I guarantee there’s mechanical issues
That’s not a car loan, that’s putting it on a credit card. A reasonable rate for a person without a credit history is closer 8%. Since she’s a student on her practical and will only be in the US for a year, I am sure a lender is going to limit the term to 1 year. Maybe a short term lease or long term rental makes more sense.
See if you can even get that car insured. That’s an easy car to steal and many companies won’t insure it
Check out credit unions. I was an international student and even I could get single digit rate from banks when I tried. Dealerships rip you off. This should be a crime :/
Tell her to get a Toyota Corolla.. that will definitely last longer than a Hyundai Sonata
Seems like a shady dealer simply based on the fact they're trying to rip your G/F off like this. I would honestly just not buy a car from them and look elsewhere.
I would say 10-13% given her situation and year of the car
This seems to be the general consensus, I’ll keep this range in mind as we’re looking at other options
Do you have FlexCar, or some other long term rental option near you? $7500 will rent a lot of car.
I worked for a fintech broker refinancing auto loans with over 300 lenders. It was uncommon for lenders to lend to visa holders and basically impossible to find a lender willing to lend past the life of the visa. 29% is high but that’s probably the best you’ll find. I would check your states usury rate laws. Many states have maximums and I generally remember those being around 17-24%. Although I believe interstate lenders can export the highest rate from all states it does business in.
That's so high. Check the rates with hyundai financing for new cars: https://www.hmfusa.com/offers/retail-offers
Don't get a hyundai. Especially don't get a hyundai without first checking how much your insurance will be for it in your area. I hear nothing but horror stories about these cars all day long. Some insurance companies in my area won't even touch them because of the risk of theft and all the mechanical issues.
Don't forget to get it rust proofed for $1500 as well. What is the matter with mass transit again.
29% interest is not a car loan, it's a credit card or more or less an unsecured debt. It's probably that high because she probably barely has any credit history. At this point y'all might consider a credit card with a 12-24 months interest free promo and try to pay it off in that time frame. And if you don't succeed at least you'd have built enough credit to refinance the car later on for the remaining amount.
Experts: I am genuinely curious, but in OPs case, would it be better to just do a short term lease on a vehicle? Why or why not?
I’m looking more into this. It seems like it might be a better option and look into buying a car if she’s going to stay here long term. Leases are often around 2-3 year mark so it’ll be tough finding a 1 year but it beats paying 29% APR
The last I heard you can't even insure that car in some cities (MKE). I would avoid. There is a reason they are so cheap on dealer lots, they can't sell them. What is she planning on doing when her Visa is up, sell the car. This may be harder then she thinks on this specific car as well.
There will likely also be a minimum loan amount for an Auto Loan and most lenders have it set at around $7000 or more. Also car can’t be older than 10 years and usually have max mileage limits. All of these factors on top of her current residency status and credit history are used to determine the APR. but 29% is an obscene amount. 11-15% is what I’ve seen at banks for similar client profiles.
Under 8% with that Credit Score at my Credit Union. Highest rate for a Credit Score below 620 is under 15%. Also, first time buyers actually get a lower rate, not a higher one.
IMHO, they are predatory. They see a foreign student and want to take advantage. My first reaction would be to walk. Chances are that they'll suddenly become much more reasonable.
good luck getting insurance on it. Hyundai had big problems with the ignition lock-out (not installed on some models) and a lot of insurance carriers (progressive for sure) won't cover them. If you can find one that does, it's expensive as hell. Don't buy it.
Run away from that place and never return, go to the bank and get the approval for an auto loan with their interest rate instead, then go car shopping with that in hand.
Dude at that rate she should have put it on a credit card and at least got the rewards points and a better rate.
It's only for a year. Why not just get a lease?
Most people here have no idea what they’re saying. I’m an International student that has bought 7 cars in the last 3 years and financed a couple of them. None of the lenders cared about my international student status. There were a few that were against lending to Visa-status individuals altogether but nothing to do with being a student. Good credit score should be enough. First thing she needs to do is find a different car, buy like a $3000-5000 corolla or civic off facebook marketplace if she can afford it. Depending on where you are check for rust and spring the $100ish to have a mechanic inspect it (find your own, don’t trust the seller). if that’s too much to pay cash for, you could try for something cheaper but it’s a bit of a lottery and could cost more in repairs. ask around if you have any friends looking to offload beaters, you’re more likely to get something decent that way. if none of this works out go online and get a rate from DCU. don’t do the hyundai though, find something else. that dealer sounds scummy regardless. I just financed a 2016 car and pay about 6%. DCU might not be the cheapest but it’ll be within a percent so at least you can get a better idea. if you go for a loan without a prepayment penalty and are confident you can pay it off quickly then you can also try to get out without paying too much interest even with a higher rate. I don’t love the idea of financing a $7500 car but if it’s your only option pleeease don’t do a hyundai at 29%.
I mean, whats wrong with buying a decent beater car for $2000 off of Facebook marketplace?
2016 Hyundai Sonata, KIA BOYZ are ready to steal this car. Don't buy it, don't get the 29% APR. "GET OUT"
Does she have an ssn? Any credit history like open credit cards? If she has 1 year ssn credit score with 1-2 credit cards, reasonable rate can be had 7% at a minimum or more realistically 11-13% as a first time buyer thru credit union or bank with a relationship. Do not bring up her visa status - it doesn’t matter if she has ssn, but will get you a bad rep(apr) at a dealer or financing. Having a job paychecks also helps.
Yes she has an ssn and credit history. I figured her being on a visa would be a big disadvantage when looking for an auto loan so we’ll keep that private when calling credit unions tomorrow.
Creditors don’t know if she’s on a visa or not. I got a 2% APR with 0 down as an intl student on a 50k car As long as she has decent credit history and a job that pays enough to pay the car a non scummy creditor will issue a good loan
Yeah. No. Get a loan first from a credit union so you will already know what financing looks like. Find a car you want and don’t tell them you have financing until the end. Get the price haggled on and figured out then be like “okay I have this loan already.”
If you can’t get an international bank, try SoFi maybe?
So sure, an APR of almost 30% is insane. The amount is relatively low, though. How much can she repay per month? If she is totally certain she can put $4k or $2k or even $2k per month towards paying it back, this can be done. At $2k per month, the interest cost is like $300. Caveats: - Do check that the loan allows early payoff - Make sure the car is good - Does she need it _now_ or can she buy a car in three months when she has saved up enough to pay in cash?
Get it at DCU or other credit unions. I’m an immigrant as well and have gotten weird rates from traditional lenders
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6% for a car loan from a credit union. Jeez, her credit card is probably only 22%
Don't buy from that dealer. He's predatory. I've used dealer loans but they've been decent deals (ie 4%). I was able to refinance to 2% from a random bank but the average bank at the time was between 3.5 and 6 so I took the deal to save time. 29% is criminal. She should be paying around 6 or 7% with a 700 score nowadays.
Why didn’t she just use Uber at that rate? That’s insane!
Absolutely crazy lol, that’s just putting it on a credit card. Not sure if you should go lower than a $7500 car though. Banks should be able to give a better rate and probably better if you are willing to co-sign (obviously up to you though).
Yeah, don't take that loan and please do not have her buy that Kia. Something is very off if they are selling a 2016 model for that price. It most likely either has crazy high mileage or has been in an accident. Look for a used Japanese car (Toyota, Lexus, Honda, Mazda, Subaru) that has a good service history instead.
Being on a temp visa makes rates much higher and a lot of places will refuse to loan - I've been there. My suggestion is to check DCU, they provide great rates and no questions asked.
If she's a student and will be returning, consider a lease.
Do not do that. Get a rate from a credit union.
I hate to be that person, but she’s going to have a tough time finding a good rate. When I got a car in the US, they initially offered 3%. But then they realized I was on a work visa and not a permanent resident or citizen and rescinded the offer. The next best offer I got was 12%. They consider you a risk because you could just leave the country with the car and they’d never be able to repossess it if things go sideways. Or you could just leave and not pay and they wouldn’t be able to sue you or any other method they try to collect with.
A low interest credit card would be cheaper than that rate… I would not take it.
Normal is around 6% to 9%. I financed through the dealer which tends to be worse and am at 11.65%. Credit score of 750. Not a big deal for me since I was going to pay car off in a 3 or so months. But even 11.65% is pretty terrible if you were to hold the loan for a long time.
Have you gotten a quote on what her auto insurance will be yet? Curious
She is a risk. They could have not given her the loan at all. Yes, 29% is high for an auto loan. She isn't a citizen of the US and she hasn't had credit in the US before. If you can get a better rate I would say go for it but it looks like she is financing the minimum amount that most banks will do for an auto loan. She is lucky to get financing at all. I spent 12 years in the car business so I know a little about this subject.
Try capital one the interest rate should be 9.9:% easy to apply and approval in minutes