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Excel, Math and Loans.
DevoutlyApathetic
Registered User regular
Registered User regular
The issue is simply stated in the bold line if you want to skip the fluff.
So I think I'm buying a new car. Well I'm buying a car and I'm in a position to buy a new one for once. I test drove a Honda Fit tonight and pretty much fell in love. This thread isn't about my horrible taste in cars though.
I have pretty much everything sorted out except for the oh so terrible fun of negotiation. I got quoted a price tonight of .9% finance, 5k down with monthly of $240.69 for 60 months. Being a geek I multiplied those last two numbers together and added the 5k and got a total cost of $19,441. Now that is obviously above sticker, what with finance costs, but how much?
I dove into excel and found a bunch of stuff that was damn near written in ye old english. The words I all understood but together, they made no sense.
So....google. Surprisingly not a common question. I ended up cheating and using this to calculate from the payments, rate and term what the principle was and thus the cost quoted. Which was $18,809. Not bad, about $1459 above MSRP though. First offer, blah blah blah, whatever.
I'll go back tonight and fill out the credit app and once that is sorted start to negotiate. I have quoted prices (anonymously through Consumer Reports) of $17,480 from a local dealer (that I expect is the "other" local Honda dealer.) Edmunds says $17,101 is the "True Cost".
I kinda like the sales guy, which is his job, and I give some credit for being there for me to test drive and they being the local service source. Not 1.5k worth of credit though.
I'm going to push to negotiate on the final price but I'm expecting some push back. I've been trying to think of ways that will effectively do that but aren't quite so obvious about it. My current plan is to tell them my down payment will be whatever brings the principal down to a fixed amount, say $12,000.
How do I get Excel (or google docs) to calculate the initial amount of a loan if I only have the payments, term and interest rate available to me?
Hmm.....can't tell if gdocs is just bad in Android's browser or my horrible connection at home is to blame. Possibly other Android apps that could do this wouldn't be a bad suggestion either.
So I think I'm buying a new car. Well I'm buying a car and I'm in a position to buy a new one for once. I test drove a Honda Fit tonight and pretty much fell in love. This thread isn't about my horrible taste in cars though.
I have pretty much everything sorted out except for the oh so terrible fun of negotiation. I got quoted a price tonight of .9% finance, 5k down with monthly of $240.69 for 60 months. Being a geek I multiplied those last two numbers together and added the 5k and got a total cost of $19,441. Now that is obviously above sticker, what with finance costs, but how much?
I dove into excel and found a bunch of stuff that was damn near written in ye old english. The words I all understood but together, they made no sense.
So....google. Surprisingly not a common question. I ended up cheating and using this to calculate from the payments, rate and term what the principle was and thus the cost quoted. Which was $18,809. Not bad, about $1459 above MSRP though. First offer, blah blah blah, whatever.
I'll go back tonight and fill out the credit app and once that is sorted start to negotiate. I have quoted prices (anonymously through Consumer Reports) of $17,480 from a local dealer (that I expect is the "other" local Honda dealer.) Edmunds says $17,101 is the "True Cost".
I kinda like the sales guy, which is his job, and I give some credit for being there for me to test drive and they being the local service source. Not 1.5k worth of credit though.
I'm going to push to negotiate on the final price but I'm expecting some push back. I've been trying to think of ways that will effectively do that but aren't quite so obvious about it. My current plan is to tell them my down payment will be whatever brings the principal down to a fixed amount, say $12,000.
How do I get Excel (or google docs) to calculate the initial amount of a loan if I only have the payments, term and interest rate available to me?
Hmm.....can't tell if gdocs is just bad in Android's browser or my horrible connection at home is to blame. Possibly other Android apps that could do this wouldn't be a bad suggestion either.
Nod. Get treat. PSN: Quippish
DevoutlyApathetic on
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You'll get different answers depending upon how that .9% was quoted.
I am a horrible person.
Honda's website has a similar offer with this in the fine print:
That seems like it is the effective annual rate if I'm calculating correctly. I might have to head out in a moment but I'll try to calculate the relevant factors out quickly.
Err.....I have zero intention of negotiating on monthly payment.
I may not have made myself clear in the post though.
In that case I guess I just wasn't sure what you're asking, since you've already roughly estimated the purchase price in the current offer.
You're initial loan amount with those numbers would be around 19116. Not sure off the top of my head how to reverse calculate that easily, but I just used: http://www.onlineloancalculator.org/ and narrowed through trial and error using various values for loan amount, 5000 for down payment, 0.9% interest, 5 years, and 0% for sales tax (since I used 0% here, the 19116 is final price after sales tax and fees). Using these values results in the 240.69 monthly payment, and a total payment amount of 14441.32 plus your down payment, so matches the total payback amount. Depending on what the sales tax is in your region, and miscellaneous other fees, that probably brings it closer to sticker.
Was looking for a way to quickly do the same on the fly in response to offers. I could try and guesstimate through an online calculator but it isn't exactly elegant.
I appreciate the offer but this was really an exercise in getting a fishing pole rather than a fish dinner.
Just pegging the borrowed amount to 12k results in a nice 205 monthly and then gets us talking about the down payment which is just the price plus 12k. That will have to do.
They repeatedly tried to do the same thing when I bought my car a few years ago - eventually, though, if you make it clear that you want total numbers and not monthly payments, they'll give in
Exactly this.
The monthly compounding rate is (1.009)^(1/12) - 1 = 0.0747%, so the interest accrues on the outstanding balance at that rate monthly.
There's a quick way to compute the present value of the payment stream if the only variable is the size of the payment. If we let the value of a unit monthly payment stream at that interest rate for 60 sixty months equal a, and i_(12) be the monthly compounding rate with v = 1 / (1 + i_(12)) then:
a = (1 - v^60) / i_(12) = 58.654.
So just multiply the monthly payment by 58.654 and add the down payment and you'll get the cost you're paying for the car minus the financing charges.
Edit: And if you want to figure out the monthly payment based on a fixed principle amount, first subtract out the down payment then divide what is left over by 58.654. You could also have roughly deduced this based on their example on the website, since $1000 / $17.05 = 58.651.
But 58.654. I can remember that.
I now understand how those people who turned glassy eyed when I tried to explain math stuff to felt like. When it became a simple division problem.....it's like some kind of practical joke!
Anyways, thanks Savant. That is quite helpful.
1. Go to your local Credit Union and get a loan quote from them. Having the ability to buy the car w/o needing their financing can help ensure you are getting the best rate. This may disqualify you from their "deal" but who cares if the price is better.
2. Get solid terms. Get them to give you their best deal, with clear terms. Then shop it around. You don't have to be shady on this, let them know you plan to shop the deal and you respect their need to make a profit. If they have the best deal, you will be back and you will be happy to give them the chance to beat any other deals you get.
3. Then go shop it around. Walking into another negotiation with a solid quote from the other dealer will give you some leverage.
I understand this is a lot of work, and isn't much fun. But, how badly do you want a fair deal?
I am in the process of soliciting quotes from several other dealers. Sadly the only other local dealer doesn't seem to stock manuals so their quote is of limited use. Still, I have no qualms driving 40,50, or a 100 miles to buy a car.
Shit, when I was being silly I was looking at driving almost 200 to buy a Diesel Golf.