Gen Z woman gets unexpected shock when it’s time to repay her car loan

A woman has shared her frustration after barely making a dent in a high-interest rate car loan, despite paying it back for over a year.

Artist Barbara “Debby” Veloz, 26, bought her first car in 2023, through high-interest financing, and majorly regrets it.

“I made a down payment of $1,500 which didn’t go towards the initial car financing loan of $11,000,” she told Newsweek.

A video of Veloz sharing her experience and warning others has sparked a big conversation on TikTok.

She uploaded a clip on November 10 to her account @barbaraveloz8, which has over 2,500 likes, where she gave some “budgeting tips” to viewers.

“The best budgeting tip is do not finance a car,” she said, revealing she had been paying off $11,000 in debt for a year and a half.

“I’m up to $10,000 and I thought I was almost done,” she told the camera.

But, as she told Newsweek, when she checked her accounts, “only $50-$80 has been going towards the debt”—a tiny portion of her monthly payment of $332.

“Nobody explained this to me when I signed for the car financing, which was a 29 percent interest rate,” she said. Newsweek has contacted Westlake Financial, who declined to comment.

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

Financial planner and wealth manager Said Israilov of Israilov Financial told Newsweek that Veloz’s high APR will “significantly extend her loan payoff period,” but in good news, assured there were steps she could take to mitigate this.

“If she has a good credit score, she can shop around for cheaper car loans and potentially refinance her existing car loan,” he suggested, adding that this is still possible if her credit score has improved since she got the first loan, and she can switch to a new lender or stay with her existing lender.

Veloz may also be able to take a personal loan at a lower interest rate, and could use that loan to pay either all or part of the existing car loan.

And, he suggested, “sometimes the simplest solution is the best solution”—she could sell the car and repay the loan.

TikTok commenters flocked to the video, where many urged her to “refinance” the car with a lower interest rate if possible.

“Anything over 10 percent isn’t worth it. I made sure of that when I financed my first car. You should try refinancing it asap,” one wrote, while some suggested she split the payment in half and pay it biweekly instead of monthly.

Others empathized with Veloz, with one writing: “I also feel like it’s such a scam that they charge that much in interest now. I know the feds rates are high but cars depreciate so fast.”

“I wish someone told me earlier,” another person in a similar position admitted.

Israilov told Newsweek he sometimes has clients who have “very little understanding of how loans work,” including the interest and principal portions or terms of the loan.

He warned a loan with a high interest rate is “rarely a prudent financial decision, whether it’s a credit card, a car loan, or a personal loan.”

“The Truth in Lending Act requires lenders to make detailed written disclosures about the cost of credit and to present the information in a succinct, easy-to-read format. This regulation makes it easier for consumers to compare credit offers.

“Before taking out a loan, consumers need to read these disclosure statements carefully and evaluate the pros and cons of borrowing.”