Surprisingly Low Auto Finance Rate

[Barbisi]

Considering we just got our full BK13 closing on 5/24/22 (our discharge happened on 2/04/22), an interest rate of 8% on a seven-year loan (which we fully intend to pay totally off in a year since we have the funds available) is actually quite reasonable.
We put down 20K+ because we didn't want to finance a huge amount at a cutthroat rate, which we assumed would be maybe 20%, given how low we thought our low credit scores were, but surprise again! Zombie 13's is already a respectable if not spectacular 670+ and mine is slightly over 650 (Experian keeps telling me it is in the 620s' and only fair) so we are not as bad off as we supposed.
Also, even though you hear so much about Capital 1 always offering the best rates post- BK, the Toyota dealership lender was a half point less, so that is the one we went with. Mind you, we don't believe 8% is a good rate for someone who has never had to go through bankruptcy, but we are freshly dicharged and therefore our credit is bucketed differently.
Is that a normal score just 4 months after discharge and is that a rate we should have expected this soon, justbroke and shipo ?

[shipo]

I haven't applied for any new credit for over 10 years so I honestly have no idea if what y'all experienced is normal or not.

[Barbisi]

Well, that's interesting shipo since you wrote the tutorial for rebuilding credit after a BK13 discharge, LOL!
I think you had to apply for CCs, but maybe you only responded to offers in the mail. I do recall you putting money down for a new SUV but since you are 2+ years out from the 13 falling off your record, maybe the dealership didn't check before they took your deposit.
At any rate, 8% is a lot better the 26% interest CC offers we were getting in the mail, and a car loan is something I have no intention of carrying around for years and years solely to build credit when our scores are actually going up anyway.

[shipo]

Yeah, I supposed applying for a credit card does kinda-sorta qualify as applying for credit. Regarding the new Tacoma I put money down on, if/when it gets built, I will be applying for credit, probably via PenFed for a loan; I'm not at all a fan of paying cash for vehicles which can otherwise be secured with low interest loans. That said, I don't anticipate needing to apply for this loan until sometime next year. Why? Because the truck I requested is a bit of a unicorn due to it being fully tarted out option wise, but with a manual transmission; not holding my breath until it gets built.

[Barbisi]

Well, in our case neither loan APR would be low shipo , so why spend double the amount on interest when paying cash for one outright will ensure we don't get in over our heads with two car loans at once? You see, in the past pre-investor shack days when our scores were near or above 800, we never had two car loans simultaneously and we never had problems as a result.
As for refinancing, I think we would be better off paying this off and using a little credit each month. From 2008 -2013 both cars were paid off , our credit scores continued to go up not down and we certainly didn't miss the car payment.

[Carmella]

Barbisi it is a great rate. I was pleasantly surprised when we got my car because my interest is in the same ballpark. I expected it to be at least double digits! And we were still active BK. NOT that my opinion matters to the BK 13 gods, but I think if we make our BK payments for 3-5 yrs and succeed we should get some credit for it on our credit report scores. I wouldn’t expect top ratings but something since we paid our mortgages, car loans and BK and student loans for some folks…

[brokenurse]

This is great news since we have 1 payment left in our ch13, 2 aging cars, and another teenager who is about to start driving. I wanted to have a little bit of time without a car payment, but I think that will only be about 6 months. Was this on a new car or preowned?

[Barbisi]

brokenurse , both vehicles are pre-owned , something we wouldn't have considered under different circumstances (i.e. , two cars in much better shape -see my other posts about the near total Sentra collapse, LOL!) We had experience in the past with only buying new, but with the pandemic record shortages and the lengthy waiting periods for brand -new autos, we decided to buy both now from the dealer with a 100K extended warranty.
Good luck on finding what you need at an affordable price!