A few questions about financing...

ExplorerXLT95 · 08-13-03, 11:57

Alright, at the moment, my current question is this...

When you finance a car - say your rate is 1.9% for 48 months - where do they charge you interest from??? The total remaining amount of the car that is un-paid for or that current month's payment?

ie say the car costs $35,065, you paid $3506.50 down, and 1.9% for 48 months

Is the interest amount for the first month
1) $31,558.50 * 0.019 = $599.61

or

2) ($31,558.50/48) * 0.019 = $12.49

God I hope it's the second one...

paco · 08-13-03, 12:40

(31,558.5 x 1.019) x 48 = $670 / month

bet993 · 08-13-03, 12:41

The interest on a loan for $31,558.50 for 48 months at 1.9%starting on 8/13/2003 with the first payment due on 9/13/2003 for the first month is $50.02. The monthly payment on such a loan is $683.94. The interest amount each month slowly decreases during the term of the loan. i.e. the interest paid on the second month is $49.01. This all assumes a straight amoritization and not some funky front end loaded loan.

jaobrien6 · 08-13-03, 12:45

Actually, the 1.9% reflects how much interest is charged per year. However, with auto loans, i believe it's usually compounded monthly, so your total annual interest payment won't be $600. Your first month's interest payment will be 31558.50 * (.019/12) = $49.97. Every month, you will pay a little less interest (because the principal is less), and the total interest you will pay in the first year is $533.08 (at least according to the ammortization calculator that i plugged this into).

So, for a $31558.50 loan at 1.9% for 48 months, your monthly payment would be $683.29, and the total interest paid over the life of the loan would be $1,239.38 for a monthly average of $25.82.

BTW, i used the payment calculator at http://www.monstermoving.com/Mortgag...s/PaymentCalc/. It's a mortgage calculator, but it works fine for any loan that's compounded monthly.

John

Pecs_McCoy · 08-13-03, 01:26

If you can't pay cash, then you'll of course finance a car like everybody does except very rich folks. Can you live with a car payment and insurance. Your "purchase price" - 10% down x 48 months @ 1.9% will = "A lot of money". Same equation but make it 60 months even if your interest rate goes up a point, i.e. 2.9% = "more reasonable but still a lot of money". (i.e. $31,558 48 mos 1.9%= $684 or $31,558 60 mos 2.9%= $566) Yes, you'll spend at the end of the loan $1100 more for a 60 mos loan but $566 is less than $684. I'm sorry if I'm spending $35k what's another $1100 over 5 years.

Slackmeister · 08-13-03, 01:32

Quote:

Originally posted by Pecs_McCoy
If you can't pay cash, then you'll of course finance a car like everybody does except very rich folks.

Wow! I never considered myself "very rich". Thanks!

mpauly · 08-13-03, 01:33

Is it 1.9% APR (annual percentage rate) like a mortgage or 1.9% over 48 months?

If APR, its the remaining balance/12 * 1.9%.
If it's over the 48 months than it's your #2 or $12.89 a month (this is what my VW finance was)

Michael

ExplorerXLT95 · 08-13-03, 01:41

Quote:

Originally posted by Pecs_McCoy
Can you live with a car payment and insurance. Your "purchase price" - 10% down x 48 months @ 1.9% will = "A lot of money".

Using all the information I've gathered in these past couple of days, my total monthly payment for the car and insurance is $966.94. That would leave me with about 3/4 of my total monthly net paycheck left over. Thus, it seems that I can afford it comfortably... (knock on wood).

Thank you all very much for your help

HellrotCi · 08-13-03, 02:05

A thousand dollars a month for a car.

You'll be sooo tired of making those payments after a year. I had a friend once tell me how he still liked his new car and he said, "The new has worn off, but the payments are still the same." With the kind of payment you're getting into you'll feel the same way.

Mosca · 08-16-03, 07:09

Bah, I should check here more often.

Is the offer rate OR rebate? If so, how big is the alternate rebate? If you use the rebate and finance at, say, 3.9%, how close is the payment? If it's within $10 or so, I recommend taking the rebate. Rate is money over time, rebate is money now. Money now is always worth more. If you pay off early, trade early, or total the car, you will never realize the total value of the savings as rate; however, if you take the rebate and any of those situations occur, you will be ahead of the game, by virtue of financing less $$ from the outset.

Tom

Deanski · 08-16-03, 09:00

Go and check out this site:Car Buying Tips

Great info and insight to purchase and finance and how to get the best deals! Worked for me!

Regards,
Deanski

bretfraz · 08-19-03, 09:42

Quote:

Originally posted by ExplorerXLT95
Using all the information I've gathered in these past couple of days, my total monthly payment for the car and insurance is $966.94. That would leave me with about 3/4 of my total monthly net paycheck left over. Thus, it seems that I can afford it comfortably... (knock on wood).

Thank you all very much for your help

Sounds like you're taking home about $4000/month which puts you at a gross income of close to $7000/month or $84,000/yr.

Good for you. At least someone is making decent money straight out of college.