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Right now the credit unions and banks can not touch manufacurers interest rates on loans. When you bu a vehiclesin most sates they require them to give you a quote with all cahrges and fees broken down satarting with the amount different from MSRP. When you get a 0% apr or loan below 4% that is dang hard to beat. But many of those loans are on the ads you see on tV with the disclaimer that they are for well qualified buyers; meaning good credit.You can go to about any banking site and do auto laons on their laon calculator.Right now many dealers have loan setup wioth banks and credit union for those who don't qaulify for the manufactruer loans;but tehy are higher.
Auto loans are based on the following factors and all can affect interest rates which in turn affects finance charges;
1. Loan to value.
2. Term of loan.
3. Age of vehicle.
4. Miles on vehicle.
5. Down payment.
6. Time on job.
7. Time at residence.
8. Monthly income before taxes.
9. Credit score/profile.
10. Total debt to income ratio.
So as you can see you have not provided near enough information to actually answer your question.
The finance charge is the interest that will accrue on the loan during the term. Based on how small yours is on the $36k purchase, I'm guessing you have a really short term, or a very low APR. Basically on this paper work they take the APR number, say 2.9% and convert it to dollars and cents that are paid over the life of the loan.
Since auto loans are simple interest, you can pay it off at any time without penalty. For example, you could call tomorrow to get the pay-off quote for your vehicle and you would pay $36k + any interest that has already accrued, not the full $2k.
Dealers like you to use their financing as they reap a profit off of the interest payments. For instance, the dealer may "buy" money from the bank for a good credit score at 5%. They then turn around and offer you a rate of 5.9%. The difference is additional dealer profit and why so many of them balk when you walk in with your own financing. The worse your credit score the more profit the dealer makes off the interest. Just as an FYI, APR on a loan is negotiable, just like everything else, but good luck finding a dealer to discuss it.
The in-house credit brands work a little differently. These are groups like Ford Credit, VW Credit, etc. In those cases the dealer is not earning a profit off the interest, but can get a cash kickback for using that financing arm.
Special deals through the in-house credit groups like 0% APR involve no kickback to the dealer, but certainly help them sell cars. It is important to calculate the cost savings of using such financing especially if you have good credit as the dealer generally has the option of giving you cash back in lieu of using the financing and that cash plus your own good rate can sometimes snag you a better deal.
Auto loans are based on the following factors and all can affect interest rates which in turn affects finance charges;
1. Loan to value.
2. Term of loan.
3. Age of vehicle.
4. Miles on vehicle.
5. Down payment.
6. Time on job.
7. Time at residence.
8. Monthly income before taxes.
9. Credit score/profile.
10. Total debt to income ratio.
So as you can see you have not provided near enough information to actually answer your question.
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.
Banks and credit unions are also typically for-profit companies, just like FMCC and GMAC. People should be looking for the best financing deal, not at whether the finance company is captive or independent.
Basically what I have learned is that your finance charge is your vehicle amount times the interest rate you agreed to times the years financed and that full amount is tacked onto your note therefor whether you pay it off tomorrow or in the full term financed, they are getting all their money. Their theory is that the average person trades in every couple of years. For example:
On a auto loan now days 75 months @ 6% on $40,000.00 your finance charge is about $10,000.00
So your total financed amount is $50,000.00
In 36 months you trade in and the bank has received $8,500.00 of that finance charge and the bank has applied about $5,500.00 to the principal so your pay off is $36,000.00 (not much less than what you paid for the vehicle) This is why everybody is upside down on their car notes. These are round about figures but you get the point. To sum it up the bank still gets 75 months interest on what turned out to be a 36 month loan. This is what the bank is counting on the average American doing.
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