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Let me guess...you told the salesman you only wanted to pay $200 a month and he said something like "We can make that work." There you go! You bought a payment, not a car.
Many people do that. Salesman ask "how much you want to pay" and then adjust the NUMBER OF PAYMENTS to match the car price. Years ago longest payment plan was 60 months. Now is 72 , 84, or even as long as 96 months, plus high interest if the buyer has bad credit.
The clueless buyers think what a heck of a great deal they got, and low monthly payments !!
Those tactics are mostly used by junk car dealers who advertise "we can finance", because they know that majority of the buyers who shop there have financial problems.
Just depends on creditworthiness, really, which mostly depends on whether you have a consistent history of either paying or not paying your debt. Total interest cost on my car, around $20,000 borrowed, strictly speaking will be $0. The actual cost is $1,500 as I gave up $1,500 for 0% interest. Works out to around 3% interest, which is better than the 4.25% I got could get elsewhere. Self-employed makes it more difficult. Outside manufacturers, no one really does stated income for car loans and most won't bother to verify information from tax returns. Add another percent or so for a used car for someone. Even if you're self-employed and limited in lenders as long as you have a history of paying your debts it's not that high.
Technology allows a person quick summation of principal vs interest paid.
Use it before entering into a numbers game.
I had a zero percent loan on a car.....and it DID disclose all the fees for early termination and end cost if I wanted the lein removed. Tried getting an addendum from a dealer to remove these fees. Most say...we aren't the loan supplier we just facilitate the paperwork. I said...you get a kickback (spiff), so earn your fee and get those terms removed. They didn't go that far...but did give me $400 in service credit... since those were the values sited on contract.
Stonepa: I concur with your rational management of $.
I have a 2006 Hyundai Tucson, bought it used with 70K for around $6700.
Financed it thru my credit union who ive been with for over 10 yrs.
Payments are $210 a month for 5 years, and when I paid it off, I will have paid $12,600, so the credit union is basically doubling their money!?
I noticed the same thing years ago when I was married and bought a house, the house was listed for $120K, our monthly payment for 30 yrs was around $850. If we made all the payments, we would have paid $306,000! That means our real interest rate was over 100%...right?
You clearly have a ridiculous interest rate on the car. What happened, did you buy it after the last car got repoed? Is your credit still in the trash?
If you can't refinance the car, your best option may be to get a second job and pay it off as fast as you can.
Location: San Ramon, Seattle, Anchorage, Reykjavik
2,254 posts, read 2,738,154 times
Reputation: 3203
Quote:
Originally Posted by Lowexpectations
No three decades isn’t the issue. People’s poor math skills and understanding are the issue. Well that and blanket statements like the one you’ve made that ignore present value vs future value of money, effective interest rates after factoring taxable benefits, opportunity costs and a host of factors you’ve conveniently ignored while tossing out your blanket statement
Of course it ignores that. 99.9% of American's don't understand it, won't leverage it, and will continue to stay broke.
The fact the OP is financing at 28% for a car shows more about his own financial health then it does what financial institutions really charge to loan money. He must have incredibly bad credit, combined with a lack of any kind of savings which has resulted in a rate like that on an auto loan. I would think this must be a "buy here pay here" place he got it from too.
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