# Car Loan Question



## Feruk (Aug 15, 2012)

Hopefully someone can chime in as I'm not too familiar on the topic of car loans. Long story short, my gf (common law wife) has a car she financed 2.5 years ago at an obsurd interest rate. She still owes something like $12K on the car at an 18% interest rate!! I'm wondering what can be done about this loan. Only looking for stuff that positively impacts her credit. If I were to pay the car off in cash, would the cash amount be less (as a lot of what she owes is interest), or would it still be the full $12K? Any advice/resources would be great from people who have dealt with this.


----------



## Spudd (Oct 11, 2011)

I don't have personal experience, but I would assume that her latest statement says exactly how much she owes (which will be a combination of the original principal she borrowed plus accrued interest). That's how much you would need to pay off. I think if you have the cash (or even part of the cash) it's ideal to pay it down as much as possible, as soon as possible. This will at least limit the amount of interest that can accrue.


----------



## crazyjackcsa (Aug 8, 2010)

If she owes $12k in principal, then that's what she owes. Back of the napkin would be about $15.5K total over the next 30 months. Pay it off in cash, or try to find a lower rate.


----------



## Feruk (Aug 15, 2012)

The $12K is what her monthly payments add up to until the end of the car loan, so this must be both interest and principal.


----------



## Spudd (Oct 11, 2011)

She should be getting statements showing her current balance... or have access to view her current balance online or something! If none of the above, can she call whoever issued the loan to find out the current balance?


----------



## liquidfinance (Jan 28, 2011)

Call the loan provider and ask them for a settlement figure.


----------



## Just a Guy (Mar 27, 2012)

One thing you may also consider, and this may sound harsh, but find a new girlfriend. It's usually good to be on the same page when it comes to finances and a relationship...


----------



## SkyFall (Jun 19, 2012)

18% what!?


----------



## Feruk (Aug 15, 2012)

Thanks for the advice guys. We contacted the loan provider and will either pay it in cash, or, if the interest rate drops below 6%, I might just co-sign for the car and invest my cash.



Just a Guy said:


> One thing you may also consider, and this may sound harsh, but find a new girlfriend. It's usually good to be on the same page when it comes to finances and a relationship...


Not harsh, typically I'd be thinking the same thing. However, the pooor financial decisions were pre-Feruk. I've set her straight and she's been doing a great job repaying her deebts. Just a matter of removing the 18% hurdle.


----------



## Canadian (Sep 19, 2013)

If her credit rating is good enough she can apply for a personal loan (about 11-13%) from her bank or a line of credit (about 5.5-8%) and use that to pay the car loan. She'll still owe the same amount but will pay less interest. 18% car loan sounds ridiculous. That's like using a credit card to pay for the car...

If you co-sign and invest the cash, are you confident you can earn greater than a 6% return? If you're fine with getting into the situation, use your cash if you have it (and don't mind using it). Guaranteed return for [her].


----------



## coptzr (Jan 18, 2013)

Been there, done that, couple phone calls, couple hateful remarks towards the sales people who make these offers, a good sit down with the people who agreed to these absurd terms. Most cases we were able to shave a year of payments off and explain how long they must keep the vehicle to catch back up and recoup the cost or spread out the expense.


----------



## sags (May 15, 2010)

The Carfinco company is a publicly traded company that specializes in subprime car loans

They charge 30%, an admistration fee of $500, a useless third party warranty for $1200, and $1000 to install a GPS tracking device.

In 2009 their shares were .25 cents each and today they are over $11.00 a share.

Business is booming.

Lots of people are borrowing at high interest rates.


----------



## Westerncanada (Nov 11, 2013)

sags said:


> The Carfinco company is a publicly traded company that specializes in subprime car loans
> 
> They charge 30%, an admistration fee of $500, a useless third party warranty for $1200, and $1000 to install a GPS tracking device.
> 
> ...



Lots of these companies exist and in great shape financially by taking advantage of people who have poor or no credit but need to drive. 

Unfortunately not too much can be done to exit these contracts short of dropping the car off (which will eventually put a repo on the credit score). Currently have a friend going through a battle with Cavalcade Auto in Calgary Alberta.. the people are absolute criminals who sign 'lease to own' deals that are just beyond insane.. 

Let us know how it goes!


----------

