Personal Finance Advice

Interest rates that are advertised on television commercials and print ads can seem too good to be true, and in some cases, they actually are. In fact, if you have a blemished credit history and a less-than stellar credit score, then you can safely assume that the low interest rates you see advertised for loans and credit cards probably don’t apply to you. Either you won’t qualify for the financial product at the low advertised interest rate and will be offered a higher rate, or you will instead be turned down for credit altogether.

That’s what it means when you see “WAC” next to the interest rate, which means “With Approved Credit.” You might also see “OAC” or something else similar, but they all mean the same thing; if you don’t meet the credit standards of the lender, you won’t get the advertised interest rate.

Sometimes it isn’t your credit history or score that dictates what interest rate you qualify for. Instead, lenders oftentimes state that only certain items qualify for the lowest interest rates. For example, when a bank offers a really low interest rate for auto loans, it isn’t unusual for the bank to only offer this interest rate for new vehicles purchased through a car dealership. Used cars -even when purchased at a dealership- may not qualify for the very lowest interest rates. The length of the loan might also disqualify you from getting the lowest interest rate. In most instances, low advertised interest rates are for loan terms of 48 or 60 months. If you go beyond these terms, your interest rate may increase.

Problems arise when you don’t realize that your loan approval is at a higher interest rate. Some financial representatives won’t specify that your approval isn’t at the advertised interest rate, but will instead congratulate you on your loan approval and hand you documents to sign. If you don’t read the documents carefully you may not realize that you didn’t actually receive the interest rate you thought you did. If you complain to the representative you’ll be told that you simply didn’t qualify for the low interest rate based on whatever factor (credit score, type of loan, etc) and that since you already signed the documentation for the loan, it was assumed that you read the paperwork and accepted the interest rate you were offered.

For this reason, never assume that a loan or credit card approval includes the low advertised interest rate. Before you sign anything, study the paperwork to find out what interest rate you were actually given. Don’t sign the paperwork if you don’t agree with the interest rate.