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Dear Terry,
I think I've made a terrible mistake. My husband and I just bought a car and because of a 2-year-old discharged bankruptcy (me only) we were financed with a high-risk company at 15.25 percent. We have signed all the paperwork.
We wanted to put $2,000 down on the car (used) but the finance company said to put only $400 and that after 30 days we could start putting extra above the monthly payments.
We have now found a way on our own to finance with 11 percent interest. Can we approach the car dealership and cancel the first financial company deal and pay off the car with our new financial option? Or, will we have to deal with the credit company and pay a penalty for paying the car off right away?
Foolishly, we didn't read the multitude of forms we had to sign when completing the financing deal. We are willing to pay a penalty to get out of this deal because we will still save in the long run.
The car and loan are in my name. Will paying it off right away help boost my credit rating? The new financial option will only be in my husband's name, so it will not help my rating.
-- Lisa
Dear Lisa,
Have you checked your loan papers to see if there is a prepayment penalty? I suspect there is, given the bizarre advice to put down less money and then add something extra to each monthly payment.
No matter what you find, you'll
have to deal with the finance company, assuming
you've already taken possession of the car. Next
time, read everything and sign nothing until you
fully understand.
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