Submitted by LupinChronicles t3_z964vj in personalfinance

I totaled my car about a month, the same day I got my offer letter. I make 75k but I have 560 credit and needed to buy a car because I commute about 170 miles a day. I searched for used cars for about a month and all of them WAY above what they should be, so I opted for a new car. Found a dealership that sells at msrp and was approved for 30k loan for 2023 sonata. The monthly is exactly $700 with $3000 down so ARP is 18% which was expected. As much as it was expected, and as much as I know I need a car instead of continuing rentals, part of me feels like I might have made a mistake. So just need some clarity from the pros. I can still change my decision, have not drove home with the car yet, but did a lot of the paper work already

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Levertki1 t1_iyfa58m wrote

170 miles per day is 42k per year. Your loan will outlast your car.

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buildyourown t1_iyfdvlh wrote

This. In 3-4 years your car will be dead and worth zero while your loan will still be $28k. (I didn't do the math)

Gotta move some stuff around. Job, housing, loan, etc. The reality is you can't make this work with your credit so change what you can.

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time_wasting_student t1_iyf63ki wrote

18% is a crazy high interest rate.

If you can run away, do it.

Do you have savings sufficient to purchase a used car? If you stick with this loan you will be paying $8400 per year for many years. You will outpay the value of the car a considerable amount.

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LupinChronicles OP t1_iyf6k40 wrote

If I run away from it, what would the alternative be for now? (Also I plan to refinance in 9-12 months)

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Main-Inflation4945 t1_iyf7hp3 wrote

You should not rely on a quick refinance in the current market. You might want to see if you can get better financing from a bank or credit union, but a brand new 2023 vehicle does not seem appropriate under the circumstances.

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spiritfiend t1_iyfbd1y wrote

Probably not the advice you asked for, but you should also consider that commuting 170 miles a day is a big mistake, either in your choice of living arrangements or employment. Any car will eventually break down with that much daily use.

The 18% interest rate is also way too much to pay on any loan. I don't believe Hyundais have a great reputation for reliability.

Check if there's public transit options for your new job and look for apartments closer. If not, try to find a used car (1-2 years old) from a more reliable brand.

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HorizontalBob t1_iyf7fcs wrote

18% is high, but 560 is pretty low. You could try to get a better rate from a credit union.

Considering you're probably putting on 50k+ miles a year, I would hope you're getting reimbursed or something.

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hopingtothrive t1_iyfau8c wrote

I don't see any pros.

You are not in the position to buy a new car (which loses it's value as soon as you drive out the lot). Insurance will be higher. 18% is crazy.

If you signed it's too late. Just because you didn't drive the car away doesn't mean it's not already yours. So why bother questioning it now.

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MikeWPhilly t1_iyfab2l wrote

Mistake was already made. All you can do at this point is pay the car down faster and address your credit score. Refining in a year might be pointless if your score is so low. If it’s recent isuses then all yo can do is eat the pain and pay extra to get the loan gone faster.

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lonewolf210 t1_iyfe1iv wrote

18% is like credit card interest levels high even at 560 you should be able to do better than that

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tossme68 t1_iyf9qdz wrote

Well that sucks. I used to work for a company that gave loans to people with poor credit and my advice to you is to get your financial house in order ASAP. Make all your payments on time for the next year and then try to refi -this is what most of the people we had tried to do, granted 40% defaulted and another 20% always paid late but these companies used to report to the credit agencies every month so if you actually do pay on time it's good for your credit. Good luck.

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DellTheLongConagher t1_iyf81cv wrote

The mistake was buying a new car. As that means you're eating maximum depreciation and it costs much more to insure.

Therefore, financing it doesn't make economic sense. Like time_wasting_student said, you'll outpay the value of the car a considerable amount.

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Thundrpigg t1_iyfcfg0 wrote

$3000, depending on where you live, can buy you a running car.

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