Woman shocked to pay $17,000 in interest on used van due to low credit score
A Listowel, Ont. Woman said she was shocked she will have to pay more than $17,000 in borrowing costs for a used van because of her low credit score.
"I don't want to pay double for a van. I can't afford to do that," said Theresa Loth.
Loth said she bought a 2014 Dodge Grand Caravan three years ago and has been paying about $500 a month in loan payments.
She recently went back to the dealership to see how much money she owed and was shocked to see that she has barely paid for half of it due to high interest charges.
When she bought the van she knew she would have to pay higher interest costs because she said she has been late on payments before and has a low credit score.
A credit score is a number between 300 and 850 that tells lenders if you're a good credit risk and the higher the number, the better.
“We knew going in that it was going to cost us more. I knew that I was going to have to pay 20 per cent interest and I was OK with that," said Loth.
However, now she is shocked seeing exactly how much the van is actually going to cost her.
The price of the van was $17,694, but with other fees and taxes the total came to $22,937. Loth took a 6-year loan with an annual interest rate of 21.65 per cent.
The cost of borrowing is $17,314 for a total cost owed of $39,457. Loth said the amount of interest she has to pay is about the same cost of the van.
“For them to tell me after paying $20,000 I still owe another $20,000 after three years is kind of insane," said Loth.
Laurie Campbell, director of client financial wellness with Bromwich & Smith licensed insolvency trustees, said that once you have a low credit score it can take years to improve it.
"The poorer your credit rating the more you are going to pay, the higher your interest rates are going to be for whatever products and loans you get," said Campbell.
Even being late or missing one payment can negatively impact your credit score.
“Whether it's a cell phone bill, a credit card payment or a loan installment, whatever the case may be, you have to make your payments on time, every time" said Campbell.
To improve your credit score, use credit wisely and always pay your bills on time. Always at least make the minimum monthly payment and limit your number of credit applications.
You should check your credit score annually and look for errors.
Loth feels it's unfair that people who have had credit issues in the past should have to pay higher interest rates on loans.
"I feel like it's a predatory system going after people who are struggling, the working poor. It doesn't make any sense," said Loth.
You used to have to pay to get your credit score, but now Equifax will let you check it online for free or you could also ask your bank.
It’s to something to monitor as you want to make sure your credit score number is stable or going up and not down.
- 300-579: Poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very good
- 800-850: Excellent
Source Equifax
CTVNews.ca Top Stories
Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
Stormy Daniels describes meeting Trump during occasionally graphic testimony in hush money trial
With Donald Trump sitting just feet away, Stormy Daniels testified Tuesday at the former president's hush money trial about a sexual encounter the porn actor says they had in 2006 that resulted in her being paid to keep silent during the presidential race 10 years later.
U.S. paused bomb shipment to Israel to signal concerns over Rafah invasion, official says
The U.S. paused a shipment of bombs to Israel last week over concerns that Israel was approaching a decision on launching a full-scale assault on the southern Gaza city of Rafah against the wishes of the U.S.
Former homicide detective explains how police will investigate shooting outside Drake's Bridle Path mansion
Footage from dozens of security cameras in the area of Drake’s Bridle Path mansion could be the key to identifying the suspect responsible for shooting and seriously injuring a security guard outside the rapper’s sprawling home early Tuesday morning, a former Toronto homicide detective says.
Northern Ont. woman makes 'eggstraordinary' find
A chicken farmer near Mattawa made an 'eggstraordinary' find Friday morning when she discovered one of her hens laid an egg close to three times the size of an average large chicken egg.
Susan Buckner, who played spirited cheerleader Patty Simcox in 'Grease,' dead at 72
Susan Buckner, best known for playing peppy Rydell High School cheerleader Patty Simcox in the 1978 classic movie musical 'Grease,' has died. She was 72.
Jeremy Skibicki has 'uphill battle' to prove he's not criminally responsible in Winnipeg killings: legal analysts
Accused killer Jeremy Skibicki could have a challenging time convincing a judge that he is not criminally responsible for the deaths of four Indigenous women, a legal analyst says.
Bye-bye bag fee: Calgary repeals single-use bylaw
A Calgary bylaw requiring businesses to charge a minimum bag fee and only provide single-use items when requested has officially been tossed.
Alcohol believed to be a factor in boating incident after 2 men die: N.S. RCMP
Two Nova Scotia men are dead after a boat they were travelling in sank in the Annapolis River in Granville Centre, N.S., on Monday.