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Brody
The WatchThe First ShoreRegistered User regular

Over the past couple of weeks my wife and I have been looking at getting a bit of a bigger car, and a couple of times have asked to see what the numbers looked like, and the first couple times my eyes just glossed over, but this last time I managed to semi engage my brain, and I have some questions.

The numbers they gave me came out to $14,208 financed, with a 5.99% rate over 72 months. They said the monthly payments would be $248 a month.

$248*72= $17,856

$14,208*1.0599= $15,059.06

$14,208*(1+.0599)^6= $20,142.91

The result of the monthly payments doesn't equal a flat 5.99% increase, and doesn't equal the principle compounded yearly either. Also, no one in their office understood the question "How do they calculate the monthly payments".

So, can anyone explain know how they get from $14,208 to $17,856?

The numbers they gave me came out to $14,208 financed, with a 5.99% rate over 72 months. They said the monthly payments would be $248 a month.

$248*72= $17,856

$14,208*1.0599= $15,059.06

$14,208*(1+.0599)^6= $20,142.91

The result of the monthly payments doesn't equal a flat 5.99% increase, and doesn't equal the principle compounded yearly either. Also, no one in their office understood the question "How do they calculate the monthly payments".

So, can anyone explain know how they get from $14,208 to $17,856?

"I will write your name in the ruin of them. I will paint you across history in the color of their blood."

*The Monster Baru Cormorant* - Seth Dickinson

Steam: Korvalain

Steam: Korvalain

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## Posts

dispatch.oonmaybe your third number - 5 years interest on 12*248 - 4 years interest on 12*248 - 3 years interest on 12*248 and so on?

Assuming monthly payments for 72 months and that your monthly payment is $248 ... then it looks like you're financing a grand total of $15,030 (or so).

So, where, exactly, is the $14,208 coming from? Because if that's the price of the car post-downpayment, and your actual interest rate is 5.99%, then your monthly payment should only be $235.

If you're not comfortable posting more details here, you can PM me some details and I can help out more.

EDIT: They aren't charging you any financing charges, are they?

Also, ~6% interest on a 6-year car loan is kinda fucky; how's your credit? Like, a decent credit union would be charging about half that at the moment, based on the three I'm a member of.

EDIT2: Is this an older used car you're financing?

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Wilds of Aladrion: [https://forums.penny-arcade.com/discussion/comment/43159014/#Comment_43159014]Ellandryn[/url]

Edit: 2011, and it was before credit checks, so they were showing me ballpark interest rates/loan lengths.

BrodyonThe Monster Baru Cormorant- Seth DickinsonSteam: Korvalain

Car loans are simple interest - you don't pay interest on the interest- and the key word you are looking for is amortized.

You only pay interest on the outstanding principle. Your monthly rate is effectively 0.486%

So your first month's payment is:

.00486*14208=69.05 in interest and the remaining 178.95 toward the principle

The second month is .00486*(14208-178.95)=68.18 in interest and 179.81 toward the principle.

Month three is .00486*(14208-178.95-179.81)= 67.31 in interest and 180.69 toward the principle.

Etc Etc.

this is a pretty good explaination

https://www.ifsautoloans.com/car-loan-interest/

Also, that rate you are paying is really not good. If your credit allows it, I'd look somewhere else, with a lower rate to get away from the 72 month term.

The Monster Baru Cormorant- Seth DickinsonSteam: Korvalain

Lastly you may want to read up on the difference between APR (Annual percentage rate or

what is advertised) vs APY (Annual Percentage Yield orwhat you will be paying). You're not wrong that much of this is carefully designed to confuse you and get you to look just at the monthly payment and not look at what you will actually be paying in interest over the life of the loan.ThundyrkatzonThe Monster Baru Cormorant- Seth DickinsonSteam: Korvalain

I laughed out the door.

If you assume that the rate they gave you is accurate, then the amount of the loan you are financing works out to $14,968.46, so either they've lied about the rate they're charging or have added on some hidden charges, which is probably what has happened.

That'd be a big red flag to me.

In a related note, your bank may be able to offer a better rate by going through them directly. Generally they can give you some "sample" terms without actually pulling your credit, so you know where about you sit.

You can get pre-approved for up to X amount through you bank or credit union and see what rate they give. Then go into the dealer with that knowledge.

Never, ever buy a car based off what the monthly payment will be. Instead, get the total price set (including tax, title, and license), then the trade in, then figure out financing. Don't let them 4-square you and don't answer them on what monthly payment you can afford. Instead, say I'll pay X dollars for this vehicle (have a reasonable figure for it, you can use TrueCar, Kelley Blue Book, or other online resources to find a reasonable price).

Here's a good interest calculator for cars: http://www.calculator.net/auto-loan-calculator.html

badpoeton