APR for a Personal loan... No Credit history... HELP!?

I have a friend who is trying to buy a car off of my parents. It's $4000, and she's trying to take out a personal loan. She has NO credit history, but she has a savings account at Citizens Bank were she is trying to get the loan. Is she going to get slammed with interest???

Unfortunately, yes she will.

Heh good luck trying to get a personal loan with no credit history...NO credit history is almost as bad as bad credit history, and sometimes it's even worse. Since your friend has no credit, the only way she'll be able to get a loan will probably be if she got a parent or other trusted person with good established credit history to cosign the loan with her. But those people might not want to cosign, because if she defaults on the loan, then the bank can go after her OR the cosigner.

Savings accounts mean NOTHING when it comes to credit. Also, I'd recommend telling your friend to change banks...Citizens Bank SUCKS. They are very stingy with giving out loans or credit, even to the people that have checking accounts and DO alerady have good established credit. They have horrible service and they tend to act deceptive and shady.

If she has no credit history, her best bet on a used car loan is through her own bank, which you say is Citizens.

There really isn't a reason for her to take out a personal loan, which always carries a higher rate than a secured loan.

Some banks have portfolio products that they offer to folks with little or no credit to help get them started.

Probably. She should shop around (lenders, that is).

Why is she trying to take out a personal loan instead of a car loan? A car loan should be cheaper and easier to get, especially with no credit. Either way she is going to be paying some hefty interest though.

The best way to find out, is a simple phone call to Citizens Bank.

There are several factors that may increase the rate:
1) Her credit history (non-existant)
2) How much is in her savings account
3) Her financial stability (i.e. is she working, if so, how long as she been working at her current employer).

A quick look at their website led me to this, which is the highest rate that it looks like they pay for savings accounts:
http://www.citizensbank.com/pf/savings/circle_gold_savings.aspx

In all honesty 1.75% APR isn't a lot, she'd be better suited putting her money into an EmigrantDirect.com savings account (or HSBS Direct), that currently earns 5.05% APR. Or she could choose ING Direct, and earn 4.5% APR.
No, those rates aren't teaser rates. Which are rates that are only good for 1-12 months, and then they go back down.

She can easily open up a checking account (if she doesn't have one already), and transfer the funds from her savings account, into the checking account, and then transfer that into EmigrantDirect (or any other high yielding savings account).

I've had money in both ING Direct and Emigrant Direct for almost 2 years now.

Also, she should get the lowest rate that is available to her. Perhaps she could qualify for a 0% loan on a credit card (if she signs up and gets a $2,000+ limit, which will usually be good for only a year). That would make her payments about $333/month if she's approved for 2 different cards with a $2,000 limit. Although, if she could get a rate that was anywhere under the rate she could get at the savings account, she's ahead of the game.
The last paragraph is kind of assuming that she's close to, or in college, where those kinds of cards are offered all the time (in the hopes that the crazy college kids will forget to pay on time).

Personally, if I did the car buying thing all over again, I would make sure to have enough saved (by getting driven to work by parents/friends, or simply working close enough to work to walk), until I could afford to pay the monthly loan for a car by using investments (i.e. brokerage accounts, etc.). But I've also gotten a little wiser as I age.
As an example, if she saved up $22,857.14 (through compounding interest, etc.), she could at least offset $100/month from a car payment by keeping a very, very safe ING Direct CD account (earning 5.25%) Of course, if she opened up a brokerage account and earned 8%/yr on average, she'd only need $15,000 in the account.

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