citifinancialauto Complaint - outrageous usurous policies

Review by rmstad on 2005-10-24
COLUMBUS, OHIO -- In 2002, I purchased a used car from Budget Rental Car. Because of a three year recovery and rehabilitation due to an aorta dissection in FEB2000 I owed numerous balance due hospital and physician bills which decimated my formerly excellant credit rating. As a result of my poor credit I was required to finance the car at an extremely high interest rate, i.e. 50%...cost of car-$8,000, cost of 6 year loan-$4,000...total loan cost - $12,000. Two weeks ago, I totalled out my car driving over a traffic island. The payoff to citifinancial auto is $6,220. I made 28 monthly payments of $196.06. I was a few days late on 2 payments for which I was charged $15.
I discovered the interest rate for the loan was not 50% but 68%. Meaning only 32% of each monthly payment went toward principle.
Comments:3 Replies - Latest reply on 2005-10-25
Posted by norrina on 2005-10-24:
Wow. Uhm. Anyone else care to tackle an explanation of ammortization here? I did the math for you, your interest rate was probably about 14.5%. The reason your total payments ended up at 1 1/2 times the cash cost of the vehicle has to do with standard lending procedure, which is that your payments are applied to interest before principal. Thus your principal is paid down a little each month, making the interest accumulating the next month less (interest accrues based on your current balance of your loan), and so it goes. Each month a little more of your payment goes to principal. Provided you make your payments on time.

Not that I expect any of this made any sense or difference whatsoever to our friend's feeling of injustice here. *sigh*
Posted by tikkimouse on 2005-10-24:
Thanks for explaining it, Norrina. I knew the reason but couldn't have put it into words like that.

I'm sorry about your heart problems, Rmstad. I hope you're doing better now.

However, it pays to think long and hard about financing something when your credit is bad. Mine is bad, too, due to illness. I don't have a car because I know financing it would be a huge mistake. Instead, I take the bus on the disabled pass I applied for or get a ride from someone if I need to.

Try contacting your county bar association. Many of them offer free or low cost sessions where you can ask about legal matters. Perhaps they can advise you on how to get some of your charges lowered or hook you up with a lawyer who will work pro bono or for a low fee.

Good luck!

Posted by Anonymous on 2005-10-25:
Excellent Norrina!!!! Great post

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