How did this happen?
Many commenters suggested Veloz had signed up for an unreasonable interest rate from Westlake Financial, an LA-based auto loan company that barbaraveloz8 mentions in the clip. The reason for the bad rate might be bad credit.
It’s possible they’re right: If she was offered a no-money-down loan of $11,000 for four years and eight months at a 29% Annual Percentage Rate (APR), she could expect to pay at least $8,000 in interest by the time the loan was finally settled — possibly more depending on whether the loan compounds monthly or annually.
A 29% APR means the borrower pays 2.42% in monthly interest on the total loan.
Running the figures for this type of loan through an online calculator results in an estimated $331 monthly payment, of which $265 would go toward interest. In this light, the TikToker’s claims begin to make more sense.
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Learn moreOut the door price
Veloz claims in a followup post that she made a $2,000 down payment but that it didn’t make a dent in what she owed for the vehicle.
What she likely paid was an out-the-door price, which dealers sometimes collect before allowing buyers to drive vehicles off their lots. The sum may include dealer fees, warranties, fabric and paint protection, but could have no impact on the actual balance of the car loan itself, Car and Driver explains.
Dealers regularly try to attract customers with a host of discounts, credits and offers, many of which aren’t as sweet as they initially seem. Out-the-door fees are a prime example.
Take the time to use a car-loan calculator and read your contract carefully to ensure you know exactly how much you’re paying and for how long.
Otherwise, you might end up telling a tragic tale on TikTok.
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Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.
