Y2KS2K02780

UPDATE ACTUAL CONTRACT NUMBERS UPDATED IN POST BELOW
ok i got my 00' S2K with 7200 miles last year for $24,000 ish, I had no credit so i was at 12.9% , $526 for 60 months, I put 4600 down. (1400 trade, 1200 tax, 2000 down)

Its been a year he told me to go back and refinance, so I called today and got a rate of 6% @ 423/month for 60 months again. So all the money I paid the first year went down the drain pretty much?

Someone please explain thanks

ruexp67

On any loan your payment is a combination of Principle (the actual ammount you borrowed.) and Interest (the 'juice' on the principle.) Every loan is baiased so you pay more interest than principle on the first payments, and it transitions to more principle by the last payment. Like your first payment might be 90% interest, and 10% toward the principle. The tenth payment might be 85% interest and 10% to principle (even through the ammount you paid is the same each month.) What this means is that you did not do much to pay down your debt in the last year.

So the bulk of your first years payments went to pay off interest and NOT to pay down the principle. Forgetting about the down payments (because that's already worked into the calc) you would have paid (over the life of the loan) $31,560 (that's the orignal payment times 60 mos.) With the new plan you will pay $25,380. If you made exactly 12 payments under the old plan then you paid $6,312. So you will end up paying $31,692 (the $25k from the new loan, plus what you already paid on the old loan.) Which is a difference of $132 NOT in your favor, plus you will have the loan out for an extra year (which is really why this is not a good deal for you.) My advice is to keep paying the $526/month that you are used to and you will pay off the car early. THAT will save you money, and make the refi worth it.

Elistan

At $526 for 60 months, you're paying a total of $31,560.

With the new deal, $423 for 60 months is a total of $25,380.

That's $6,180 less being financed. Which is how much you've paid off so far, if I understand how this works.

I'm not sure how the differing percentage rates work into the situation, though.

Intrepid175

I don't claim to understand all the nuances of all the credit stuff but.....You got a high interest rate (12.9% is outragious) because you had no credit history. That means you were an unknown entity and they didn't know if they could trust you or not. So, they hit you with interest rates that are through the roof. Now that you've been making payments reliably for a year, you've proven yourself and can qualify for a reduced interest rate. You quoted 6% which is less than half the rate you were being charged and your monthly note goes down by just over $100 which isn't bad at all.

Is the money you spent for the first year wasted? That depends on how you choose to look at it. I'd call it the cost of establishing your credit rating. Next time you go to buy a big ticket item, they'll have a record on you. If you keep paying the bills on time which will keep your credit score up, you'll qualify for that 6% (or better) from the start which only works in your favor in the long run.

One thing I'd do if I were you. You're already budgeted for the $526/month payments. Keep making them even with the $423/month note on the refinance. You're already a year into paying for the car and now you're starting over again on a new 5 year loan which is going to keep you upsidedown on what the car is worth. Over paying the note will get you out of that situation faster and there's nothing quite like driving a car that's payed for!

Good Luck,
Steve R.

ruexp67

[QUOTE]Originally posted by Intrepid175


One thing I'd do if I were you.

Intrepid175

[QUOTE]Originally posted by ruexp67
Wish I would have thought of that.

Axel6

Your numbers are not working out...

PV = 24,000-4,600 = 19,400 (amt financed)
i = 12.9%
n = 60 months
Payment = $440

This does NOT equal $526 as you indicate.

Let's say your numbers are correct. You've already laid out $526 x 12 = $6,312. If you factor in your "new" deal, that is 60 x $423 = 25,380 for a grand total lay out of $$6,312 + $25,380 = $31,692.

If you stick with your current deal, you would lay out $6,312 + (60-12) x $526 = $31,560

Therefore...STAY WITH WHAT YOU HAVE!!! The offset is basically that you've ALREADY paid for 12 months. Your "new" deal is a loser. The only benefit is to their finance dept. Good luck.

ruexp67

http://www.bankrate.com/goocalf/auto-loan-...-calculator.asp

Well, Axel you did not include sales tax, but even with a 7% rate you are correct, the numbers do NOT add up.

Y2KS2K02780

I also plan on selling my old car and puttin that $4500 towards paying off the S, I'm just waiting to sell it now


ok I looked at my papers heres the info from the dealer contract form

1 total price: $24,988
2 discount: n/a
3 Trade in allowance: $1500
4 Rebates :$23,488
5 Mass sales tax @ 5.00 : $1174.40
6 Title prep: $65.00
7 Documentaion prep: $129
8 other: $1595
9 Total contract price: $26451.40
Amount financed: $23286.40
Deposit $2000
Cash due on delivery : $1200

Bank contract form:
12.75 apr
526.86/60 months
finance charge : $8325.20
Amount financned: $23,286.40
total payments: $31,611.60
down payment: $4700
total sale price including down payment: $36,311.60


Itemization of amount financed:
Cash price ex. sales tax: 24988.00
trade in: 1500
cash down: 3200
Total down 4700
Unpaid balance of cash: 20288
amounts paid to others on your behalf:
a to public officals- 1239.40
b to VSI insurance- 35.00
c Service contract to Ap1: 1595.00
d documentaion fee to dealer: 129.00
amount financed: 23286.40

DaveOnLI

Try another lender. They might be adding in a large fee for refinancing and hoping you wont notice because they are extending the payments out another year.
It doesn't make sense to stay at 12% if you are worthy of a 6% rate.
Ask for numbers that reflect 48 months instead of 60 that way you can compare directly - how much will it cost me to finish the existing loan vs. a refinanced loan.