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Old 05-04-2018, 02:28 PM
 
Location: The analog world
15,572 posts, read 8,749,121 times
Reputation: 20900

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Quote:
Originally Posted by hitpausebutton2 View Post
Thank you for being a rational poster..

Yes my DTI is above 30 and that is the #1 issue on getting a better interest rate at the moment. I am working quickly as possible to pay off one car as i have 2 years left on it. Quickly as i can pay that one off then it will free up more income. If i pay it off to quickly, i get hit with a $500 "Fine" and i call that BS fees. Another issue that needs to be addressed. ( penalty fees for paying things off early. seriously?)

Debt makes you a slave worker. Think I remember a quote.. No debt, means a person can live and prosper, Person in debt, is slave to debt for rest of their working life. something along those lines. Remember a boss kept asking same person all the time if he willing to do OT, and he kept refusing. His excuse was he doesnt have debt, so does that does will always step up for OT to pay it off. Debt is the devil..
Exit fees are not a given. To put it bluntly, you did not read the fine print, and it's come back to bite you in the butt. Next time, shop for a loan with no prepayment penalty and chalk this up to a lesson learned.
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Old 05-04-2018, 02:34 PM
 
2,360 posts, read 1,028,642 times
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Quote:
Originally Posted by randomparent View Post
Exit fees are not a given. To put it bluntly, you did not read the fine print, and it's come back to bite you in the butt. Next time, shop for a loan with no prepayment penalty and chalk this up to a lesson learned.
O i did, and manage to get out of it on my other car note by dealing with chevy bank directly. Got better interest rate with them as well.. But why have this so call "exit fee, or pay off early BS fee".. They already got their interest payments first before principle is being paid.


Then just google and response is pure BS..
So why the prepay, anyway?

  • Prepayment penalties protect the lender/investor who purchases the loan
  • From early prepayment associated with a refinance or home sale
  • Since they won’t make as much money on the loan
  • Assuming it isn’t kept until maturity, or worse, paid off almost immediately
  • But this also means the interest rate might be lower for the borrower
Prepayment penalties were devised to protect lenders and investors that rely on years and years of lucrative interest payments to make money.
When mortgage loans are paid off quickly, regardless of whether by refinance or a home sale, less money than originally anticipated will be made. It’s a simple concept.
The mortgage is extended with the belief that a certain amount of interest will be collected. If in reality, much less is realized, the holders of these mortgages won’t profit as they originally expected. So it’s clearly less desirable for those who hold the loan.
This is essentially a way for those with an interest in your mortgage to ensure they get something back, regardless of how long the mortgage is kept before being paid off.
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Old 05-04-2018, 03:15 PM
 
2,360 posts, read 1,028,642 times
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Quote:
Originally Posted by tiltup View Post
No, they won't get their interest if you pay off the loan faster. If you had a $10,000 loan at 5% interest only for 36 months. You would pay $41.67 per month and then in month 36 you would also pay back the $10,000 principal balance you originally borrowed. Over the course of the loan you would have paid $1,500 in interest and this is what the lender is expecting you to pay.

If, however, after three months of $41.67 you pay back the $10,000 you initially borrowed you would have only paid $125 in interest for the life of the loan. That is $1,375 less than the lender expected you to pay. Now, some lenders will allow you the flexibility to do this and won't charge you, however, others will not. It is up to you to make sure you get the type of product you are looking for. Interest only? Amortizing? Prepay? Term? Fixed rate? Floating? Etc.

So its a business safety net to screw the consumer if they want to get out of debt faster? See what I mean that the game wants you to be in debt so they can bank as much as possible off you. My interest is not to allow that happen and not my fault or problem that I had the funds to pay the "debt off" before the terms are up. Goal is to be out of debt.
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Old 05-04-2018, 03:20 PM
 
Location: The analog world
15,572 posts, read 8,749,121 times
Reputation: 20900
Quote:
Originally Posted by hitpausebutton2 View Post
So its a business safety net to screw the consumer if they want to get out of debt faster? See what I mean that the game wants you to be in debt so they can bank as much as possible off you. My interest is not to allow that happen and not my fault or problem that I had the funds to pay the "debt off" before the terms are up. Goal is to be out of debt.
The terms are in the contract, and if you signed it, it is your problem. That's how these things work. If you don't want to pay the penalty, then either 1) find a loan that doesn't impose an exit fee or 2) invest your extra income and keep paying the loan on schedule. If you're smart about it, you might come out ahead if you take option two.
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Old 05-04-2018, 03:57 PM
 
5,605 posts, read 4,160,862 times
Reputation: 12338
Quote:
Originally Posted by hitpausebutton2 View Post
Thank you for being a rational poster..

Yes my DTI is above 30 and that is the #1 issue on getting a better interest rate at the moment. I am working quickly as possible to pay off one car as i have 2 years left on it. Quickly as i can pay that one off then it will free up more income. If i pay it off to quickly, i get hit with a $500 "Fine" and i call that BS fees. Another issue that needs to be addressed. ( penalty fees for paying things off early. seriously?)

Debt makes you a slave worker. Think I remember a quote.. No debt, means a person can live and prosper, Person in debt, is slave to debt for rest of their working life. something along those lines. Remember a boss kept asking same person all the time if he willing to do OT, and he kept refusing. His excuse was he doesnt have debt, so those that does will always step up for OT to pay it off. Debt is the devil..
If debt is the “Devil” why are you so upset you can’t buy a house? You do get that houses come with 30 years of debt don’t you??
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Old 05-04-2018, 04:04 PM
 
4,102 posts, read 1,718,206 times
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Quote:
Originally Posted by unc4me View Post
if debt is the “devil” why are you so upset you can’t buy a house? You do get that houses come with 30 years of debt don’t you??
+1.
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Old 05-04-2018, 04:11 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
4,112 posts, read 3,404,360 times
Reputation: 5638
Op should watch this

https://www.youtube.com/watch?v=aE54gGoEqKo

I think certain states will not allow a prepayment penalty on auto loans, Texas seems it does.

OP lenders need to make money. On an auto loan they won't make any money unless you hold it for 1-2 years, hence the prepayment.
Some lenders if you use them often and keep paying the car off early they will ultimately stop giving you a car loan because they don't make money.

No one in their right mind lends money unless it is profitable and outweighs the risk.

If you think lenders are evil, you have the option of not using them, but honestly you may miss out on many things like home ownership. If all these lenders didn't exist, think of how many people wouldn't own a house at all.
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Old 05-04-2018, 04:41 PM
 
2,360 posts, read 1,028,642 times
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Quote:
Originally Posted by tiltup View Post
It is a business safety net in the sense that it is there to protect the business venture of the lender. The lender is in the business of LENDING money. If it does not put out money, it is not making any money. Regardless of this, the main point is it is a material term of the contract you agreed to. So if you didn't want to do it, you should not have taken the lender's money or agreed to the contract.

Yes, but it is not in the lender's interest to allow this to happen and you agreed to allow that to happen. Therefore it IS your fault AND problem. Learn how to take responsibility for your actions. You might learn something.

When my company takes out loans, the Loan Agreement (contract) are 50 to 100 pages long and the attorney cost for these contracts alone are over $50,000. The prepayment penalties might range from 3% of the total loan amount or Yield Maintenance (e.g. the present value of the entire interest paid over the term of the loan). The bank is protecting its interest and you are the only one responsible to protect yours.

Yea, like i have a contract attorney to look out for whats in my best interest. The interest is already tied into the total loan amount. I know because i see how the split up my payments every month. More i pay on the principle, they seem to keep adjusting more toward the interest on the next payment. So if i pay extra 100 bucks to principle option, the next min payment split puts majority to the interest side. Guess they are trying to counter me by getting that interest paid before i pay off the main principle of the note. So seems were both after the same goal.. They try to bank off me, and im trying to get out of debt faster.
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Old 05-04-2018, 04:45 PM
 
2,360 posts, read 1,028,642 times
Reputation: 2071
Quote:
Originally Posted by UNC4Me View Post
If debt is the “Devil” why are you so upset you can’t buy a house? You do get that houses come with 30 years of debt don’t you??

Yes and hopefully by then it will be the ONLY DEBT i have to worry about, and any extra income will be focus on paying it off quickly as possible. Bank already made a profit by reselling it, so why keep paying on it for 30 years when you can pay it off in 15 ( in theory). No need to pay 15 years of interest unless your force by a contract or court order.
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Old 05-04-2018, 08:51 PM
 
5,221 posts, read 2,378,942 times
Reputation: 5111
Quote:
Originally Posted by tiltup View Post
No, they won't get their interest if you pay off the loan faster. If you had a $10,000 loan at 5% interest only for 36 months. You would pay $41.67 per month and then in month 36 you would also pay back the $10,000 principal balance you originally borrowed. Over the course of the loan you would have paid $1,500 in interest and this is what the lender is expecting you to pay.

If, however, after three months of $41.67 you pay back the $10,000 you initially borrowed you would have only paid $125 in interest for the life of the loan. That is $1,375 less than the lender expected you to pay. Now, some lenders will allow you the flexibility to do this and won't charge you, however, others will not. It is up to you to make sure you get the type of product you are looking for. Interest only? Amortizing? Prepay? Term? Fixed rate? Floating? Etc.
What lender is going to make this kind of simple interest loan??
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