‘Take the bus’: Vehicle financing is ‘a scam,’ according to this TikToker, who is apparently paying a 29% APR. How to avoid crashing into this money pit

Her post has amassed tens of thousands since being posted on Nov. 10.

Veloz claims she recently found out that, of the $332 she pays toward her $11,000 car loan every month, “only $70 to $80 a month are going towards the debt.”

“It’s a scam,” she says. “If you don’t have the cash to buy the car in cash, then take the bus until you have the cash.”

Could this situation possibly be real? Unfortunately, it could.

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.

Out 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.