Overhaulin'

How did the interest rates on my car loan go up?

Initially I was pre-approved at my bank with a fixed interest rate at 6.24%; for the loan amount of $14,000 just under me without a co-signer. It turn out it cost more for the car than I've expected. So the finance officer at the dealer said my bank won't give me more than what I've asked for. I thought that was weird. So I went with their bank with my dad as the co-sign. The dealer did his thing and came back with a interest rate at 10+%! Now just to let you know, my dad has good credit. My dad has never miss any mortgage payment or any of the two car payments he has. And I my self have a credit score of 663 which is good itself. I've have been making payments for my previous car for more than three years on time. What should I do?

Public Comments

1. first of all, they did it because it is in human nature to be greedy. as much as you can deny it, everyone out there is a narcissist. you want a better rate, the people who are financing your car want more money, and inevitably interests will conflict. your rates went up because you made a mistake, and now you need more money. the bank, which has loads of money, ultimately has the upper ground here. they present a rate to you and you can either choose to accept it, or deal with missing car payments and possibly repossession. maybe you should have bought a used car for a fraction of the price and just about the same level of quality.
2. Because you signed the contract. Oops.
3. Pre-approved does not mean you do not need a down payment or has to be on a certain car or even if you are approved. It is to get you to try and buy a car and use them for a loan. A co-signer with your credit which is fair will make APR go up and car make will too. A toyota may be less APR then a GM. Down payment also effects APR. Also debt ratio makes a big differance so if you have a 663 and make payments on time but have big balances, you will get higher APR. Your bank did not look at your credit before sending you offer that you were pre-approved so as you see it is nothing but an ad. They would cut you a draft for amount if you found car and were approved at that rate.
4. Actually a credit score of 663 is good, but it's not Tier 1. In fact, it's Tier 3, which means an interest rate of 10%+ is about right. A score of 720 or higher would get you the best rates.