Atlanta car dealer begs drivers with sub-600 credit scores to stop financing
“I currently have a 2017 Kia Sorento with 123,000 miles,” the driver begins. They’ve had the car for three years but at some point ran into some financial trouble and couldn’t make the payments. So far, they’ve given the lienholder $10,000…but only toward the car loan’s interest. The Kia owner reached out to a car dealer in Atlanta to see if he had any advice to help her get out of the bad situation. Unfortunately, the car dealer hears this same sad story over and over. “It’s customer after customer,” he explains. And there’s really nothing he can do for them.
If you have subprime credit, it’s very easy for a car loan to make things worse
Another Kia driver also messaged Yusef Benallal, who offers consulting services to folks looking to get out of their bad car loans.
The 2021 Kia owner says they owe more than $23,000 and pay $570 a month, plus another $250 for insurance. They already went to another dealership trying to trade it in for a cheaper car. That dealer’s response? “No.”
Benallal asked for more details. The driver’s credit score is 575, leading to a 29% interest rate.
When Benallal asks if the customer has any cash down, giving them an estimated range of $5K to $7K to offload the Kia, they push back. “Why you waste peoples time.”
The car salesman throws up his hands. “There’s nothing I can do,” he asserts to his followers.
The Atlanta car dealer sees this exact situation a lot
“I tell people all the time: I’m not a magician,” he says in his social media post.
He shares messages from another client who approached him about their 2018 Jeep Compass. The owner has a $17,000 balance and pays $470 a month. “Just FYI guys, that’s like a six, seven-thousand-dollar car.”
The problem is that when someone with a low credit score doesn’t have much cash down and has a relatively low income to begin with, they typically end up in a high-interest, high-payment car loan. After some time, the driver has a lot of trouble keeping up with those payments. If they have the inkling to get rid of the vehicle before the bank repossesses, which would hurt their credit more, it’s actually much harder than most people realize.
A ton of these drivers are too far underwater on their loans for a dealership to want to finance a new deal on a different car. Not only would the outstanding loan balance have to be paid off, but the driver would need a significant amount of cash on hand to cover the gap plus the downpayment on the new loan.
A lot of the time, a driver who wants a “cheaper” or more reasonable car payment can’t cover the cash crater offloading their current loan created. They don’t get approved to roll the negative equity over, either, because the cheaper car isn’t worth enough to carry that large of a combined balance.
Some industry experts label the practice of completing these high-interest, high-payment, long-term car loans predatory. But the truth is, when done according to the book, they’re perfectly legal from a business perspective since the buyer is ultimately responsible for understanding what they’re signing.
“There are so many cash cars you buy underneath $5,000”
The car dealer pulls up Facebook Marketplace and shows a variety of listings under five grand, including a Chevy Bolt, Kia Forte, 2011 Jeep, and Honda Odyssey.
“Really think about the long-term picture,” he advises, “If you have a couple grand down, go buy a cash car and thug it out, hustle, make that money, and very soon you’ll be able to buy a nice car.”
Of course, I’ll add that it’s really important to do your research and get any car you’re thinking of buying as-is thoroughly inspected by a trusted mechanic so you don’t end up with a different kind of financial headache.
