I just bought a car....

[SweetGirl]

I filed chapter 7 bankrupty 5 years ago

Financed with Honda

2009 Honda Civic

Price $15,274

$5,000 down payment

36 months

8.9% APR

$327.89 a month

How did I do?

I am going to be paying $1,000 a month instead of $327.89 a month to pay my car off in 10 months instead of 3 years to save interest, I know it is going to be the hardest thing I ever done but it is the smartest thing to do and I know I will be very proud of myself for doing it! I can do it!

[justbroke]

That's a pretty high interest rate for 5 years out from Chapter 7. Do you know what your "auto-enhanced" FICO score was? It is even more interesting that you put down $5K and the rate is still relatively high. I suspect that your enhanced score is not above 670 or the Honda isn't being nice.

I do like your plan to pay it off quickly.

[SweetGirl]

That's a pretty high interest rate for 5 years out from Chapter 7. Do you know what your "auto-enhanced" FICO score was? It is even more interesting that you put down $5K and the rate is still relatively high. I suspect that your enhanced score is not above 670 or the Honda isn't being nice.

I do like your plan to pay it off quickly.

The other dealerships want 17% so 8.9 is the best I can get! My FICO score is 450 so yeah, I have horrible credit, that is why I have high interest rate

[justbroke]

Well, the your interest rate is awesome compared to your FICO score! Yes, I would have expected high teens (17%+) or low twenties (20%+) for that FICO score. By paying it off quickly, you will offset the affect of the interest rate.

[SweetGirl]

Well, the your interest rate is awesome compared to your FICO score! Yes, I would have expected high teens (17%+) or low twenties (20%+) for that FICO score. By paying it off quickly, you will offset the affect of the interest rate.

Yup!!

[msm859]

The other dealerships want 17% so 8.9 is the best I can get! My FICO score is 450 so yeah, I have horrible credit, that is why I have high interest rate

Well hopefully you have learned from this exercise that you need to improve your FICO score. 450 five years after filing sounds like you have been doing other things to hurt your score after your bk.

[SweetGirl]

I have not been doing other things to hurt my score, it never went up since I have not done anything to improve my fico score

[HHM]

Good job. Given that it is a 3 year old used car, that is not that bad a rate...the best rate probably would have been somewhere in the 5's anyway (more likely the 6's) unless you go through a credit union, just depends on the region and the lenders available. So, you are only 2-3 points higher than what someone with really good credit would have received (although they probably would not have needed to put $5k down). Over the life of the loan, that is only a $496 difference (or $13.77 per month) between an 8.9% rate and 5.9% rate.

Plus, this car loan will help your credit.

Granted, I am extremely anti credit, but 450 5 years out for BK is almost not possible. I would suggest you look at doing some "credit" clean-up. It can only be that low if things are not being reportedly properly. You should do that at the very least.

[msm859]

Good job. Given that it is a 3 year old used car, that is not that bad a rate...the best rate probably would have been somewhere in the 5's anyway (more likely the 6's), just depends on the region and the lenders available. So, you are only 2-3 points higher than what someone with really good credit would have received (although they probably would not have needed to put $5k down). Over the life of the loan, that is only a $496 difference (or $13.77 per month) between an 8.9% rate and 5.9% rate.

Plus, this car loan will help your credit.

Granted, I am extremely anti credit, but 450 5 years out for BK is almost not possible. I would suggest you look at doing some "credit" clean-up. It can only be that low if things are not being reportedly properly. You should do that at the very least.

I think your math illustrates why it is important to be more proactive about your credit after filing for BK. 1 year and 3 months after filing I refinanced my 3 year old car at 3.9% interest with the local credit union. 6 months earlier I had taken out a secured credit card with them with zero annual fee. Albeit the refinance was from a 2.9% loan that had been discharged and not reporting the costs to me was $7500 @1% and will be paid off in 1 year thus less than $35.00. I cleared up some improper reporting by a collection agency and obtained a couple other credit cards. Only costs is a BofA secured with a $59 AF I expect to product change before the year is up. Less than 2 years out my FICO is 669. I now also have a Barclays Reward card with a $4500 limit no AF. Thus my total costs to rebuild is less than $100 and will save me far more in interest rates when I go to replace my car that has the lease running out in @ 6 months.

I agree that you should not be obsessed with your credit scores nor fall into a revolving credit trap, however, there are legitimate needs with credit and I suspect with a little intervention the OP could have received a far better rate.