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Old 03-31-2010, 01:44 PM
zox zox started this thread
 
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I'm sure this is normal but I wanted to know if finance charges on auto loans are normal? My dealer never discussed the finance charge on my auto loan until I received it in the mail. It was a $2000 finance charge on a $36,000 loan. Is that normal?
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Old 03-31-2010, 02:34 PM
 
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Just googling "finance charge" and it shows up as the interest and fees for the loan (basically the APR?)... so I guess that's how much interest accrues over the terms of the auto loan? I am just guessing but maybe somebody else knows...
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Old 03-31-2010, 02:40 PM
 
Location: North Beach, MD on the Chesapeake
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Credit laws for auto loans require a breakout for total interest paid over the life of loan. Mortgages have it, too.
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Old 03-31-2010, 02:47 PM
 
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Quote:
Originally Posted by evilnewbie View Post
Just googling "finance charge" and it shows up as the interest and fees for the loan (basically the APR?)... so I guess that's how much interest accrues over the terms of the auto loan? I am just guessing but maybe somebody else knows...
The finance charge not only includes the interest paid on the loan but the fees on the credit checks and other "processing" fees. It's not just the interest on the loan. So in that $2000 finance charge, that isn't limited to the interest on the loan. It includes that and then some
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Old 03-31-2010, 03:25 PM
 
Location: Inland Empire, Calif
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One of those three or four offices you were shuttled through during the purchase process, was the finance guy who explained all of that to you, but it was boring and you were to excited to get that new baby out on the road, to pay attention to what he was saying....
They are required to explain all charges, by law...! Somewhere in your pile of papers from the dealer, will be paper you signed stating everying was explained and you understand it..!!
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Old 03-31-2010, 04:20 PM
 
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I wonder (if anyone knows, please enlighten us), what if you took the loan (with no prepayment penalty) and then paid if all off the next week... do you incur additional "finance charges"?
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Old 03-31-2010, 04:53 PM
 
Location: I think my user name clarifies that.
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Quote:
Originally Posted by zox View Post
I'm sure this is normal but I wanted to know if finance charges on auto loans are normal? My dealer never discussed the finance charge on my auto loan until I received it in the mail. It was a $2000 finance charge on a $36,000 loan. Is that normal?
Absolutely.

Nobody loans money for free. They may use all kinds of words to describe it, but they're charging you interest - and plenty of it!
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Old 03-31-2010, 05:16 PM
 
Location: New Jersey
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That's why you should always go into a dealership with independent financing through a Credit Union or a bank.

The dealership may give you Hell for doing that--but that is because they are losing money on the financing agreement.

Last year I bought a car from a new car dealership with independent financing secured. The dealership refused to take it--"No we don't deal with that." So I walked. Next day got a call, "Yes we do take that."
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Old 03-31-2010, 05:46 PM
 
Location: I think my user name clarifies that.
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Originally Posted by johnfrisco View Post
That's why you should always go into a dealership with independent financing through a Credit Union or a bank.

The dealership may give you Hell for doing that--but that is because they are losing money on the financing agreement.

Last year I bought a car from a new car dealership with independent financing secured. The dealership refused to take it--"No we don't deal with that." So I walked. Next day got a call, "Yes we do take that."
Exactly. Ford Credit and GMAC are BIG money makers.

They want to stick it to you every way they can. And they will if you'll let them.
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Old 03-31-2010, 07:07 PM
 
Location: Purgatory (A.K.A. Dallas, Texas)
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Quote:
Originally Posted by evilnewbie View Post
I wonder (if anyone knows, please enlighten us), what if you took the loan (with no prepayment penalty) and then paid if all off the next week... do you incur additional "finance charges"?


No. Auto loans are simple interest loans, so you can pay them off whenever you want.

The disclosed finance charge is based on making all the payments.
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