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The car dealer told me the car worth $3900.00, I am paying him $279.17 for 19 months. That's $5304.23. Am I getting ripped off? If so, is there any way to fix it?

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    Yes you are getting ripped off. What a horrible interest rate even for poor credit – Eric Sep 4 '16 at 8:26
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    Did you shop anywhere else for credit? – trognanders Sep 4 '16 at 11:53
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    You need to specify what state or country you're in, because the laws on interest rates and consumer contracts can vary pretty wildly. If you're paying that kind of interest then my suspicion is that you're dealing with a "buy here - pay here" car lot because your credit is not very good. Still, many states have limitations on what kind of interest rate you can be charged, so make sure to update your question to reflect this in order to get the best answers. – Daniel Anderson Sep 5 '16 at 14:33
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    $3900 at 24.9% is "only" a payment of $250.47. There would need to be a loan of $4346.83 to get up to that payment at that rate. Does the paperwork show other costs of $446.83? – JoeTaxpayer Sep 6 '16 at 13:00
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    @Eric depending on the country it is not a bad rate. Is it USA? – Mindwin Sep 6 '16 at 14:53
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If you are a subprime borrower, that may not be an unreasonable rate given the risk they are accepting. In any case, it's what you agreed to.

As others have said, you could/should have shopped elsewhere for the loan.

In fact, you can still shop elsewhere for a loan to refinance that vehicle and thus lower the rate, unless the existing loan has equally obnoxious rules about that.

  • Another possible issue with refinancing is that the car may be upside down - the amount owed exceeds the car's value. This is particularly likely if the dealer's number of $3,900 was inflated (which would not be surprising). OP may want to check the Blue Book value for the car. If it is upside down, they'd have to come up with enough cash to pay off the difference between the balance owed and the amount another lender is willing to loan them. – Nate Eldredge Sep 5 '16 at 21:11
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You could look into refinancing with a bank or credit union. But to weed out options quickly, use a service like LendingTree, which can vet multiple options for you a whole lot more quickly than you could probably do yourself. (I don't work for, or get any benefit from LendingTree.) Whatever you do, try to do all the applying within a short span of time, as to not negatively affect your credit score (read here) by creating extraneous inquiries.

Then again, if your credit sucks, you might not qualify for a re-fi. If you are turned down, make your payments on time for six months or so, and try again.

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Anytime you borrow money at that rate, you are getting ripped off.

One way to rectify this situation is to pay the car off as soon as possible. You can probably get a second job that makes $1000 per month. If so you will be done in 4 months. Do that and you will pay less than $300 in interest. It is a small price to pay for an important lesson.

While you can save some money refinancing, working and paying the loan off is, in my opinion a better option. Even if you can get the rate down to 12%, you are still giving too much money to banks.

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    Absolutely agree that doing whatever can be done to pay that of asap is the better option. Interest rates are typically higher for used cars than new ones and without good credit they will be higher still. An extra job for a period of time to pay that loan off quickly will be better than a refinance to half the rate and paying it off as scheduled. – homer150mw Sep 6 '16 at 15:12

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