OMG..dealer quoted me $52K for an 05 coupe
Originally Posted by digital_nrg
you might consider leasing the car instead if you want that payment range. 
Originally Posted by mhollinger
You see such a huge hit for several reasons.
1. The 72 month finance window means your $40,000 debt is compounded for a long, long time.
2. The 9.9% rate is pretty bad. Compound interest is really rocking your world.
3. Your credit score is what earned the 9.9 rate, in all likelihood. Go look it up. Pay the $30 from (blah)creditreports.com to get all three scores with three credit histories. I do that every 12 months, from whichever online site gives me the best deal. Google can find you a bunch of services.
I took the liberty of creating some loan schedules for you. Please take a look at http://www.hollinger.net/files/nazty..._schedules.pdf for information.
Here's a sample graph from the schedules... I assumed a $40,000 loan.
The blue line indicates how much of your monthly payments is going toward the principal of your loan (the 40k in this example). As you can see, out of your $8,828 paid yearly, in the first year, nearly 40% of it is going toward your interest. Click into the PDF for actual numbers, and labels in the chart.
As you can see, your interest rate is primarily what kills you. I generated 6 graphs, for four, five, and six year loans, with 9.9% interest, and 2.9% interest. The 2.9% rate is what I got for my loan in February, 2005.
To give you a comparison, I have a credit score of 770 (or 780 according to Equifax iirc), and qualified for 2.9% back in February. I "paid" $32,447 for my 2005 Sedan (Premium C, splash guards, trunk mat <-- trunk mat's a rip-off), and had an "out the door" price including TT&L of $35,760. My loan schedule is up at http://www.hollinger.net/files/my_loan_schedule.pdf . Notice I pay < $2700 in interest over the term of my five year loan. You pay more than that in the first year alone of your proposed loan from the dealer.
You should look into a credit union or a bank to finance your vehicle if your dealer will not budge. 9.9 is very much going to hurt over six years. For that matter, why are you financing over six years? Does approximately $100 / month make that much of a difference in your month-to-month cash flows?
If you want me to re-run the graphs with "real" numbers for your 2003 or 2004 with a down payment, provide the loan amount you'd need including TT&L (your "out the door" price as its commonly known), down payments, rate, and loan length and I'll post back in the thread with the appropriate reports.
~ Mike Hollinger
1. The 72 month finance window means your $40,000 debt is compounded for a long, long time.
2. The 9.9% rate is pretty bad. Compound interest is really rocking your world.
3. Your credit score is what earned the 9.9 rate, in all likelihood. Go look it up. Pay the $30 from (blah)creditreports.com to get all three scores with three credit histories. I do that every 12 months, from whichever online site gives me the best deal. Google can find you a bunch of services.
I took the liberty of creating some loan schedules for you. Please take a look at http://www.hollinger.net/files/nazty..._schedules.pdf for information.
Here's a sample graph from the schedules... I assumed a $40,000 loan.
The blue line indicates how much of your monthly payments is going toward the principal of your loan (the 40k in this example). As you can see, out of your $8,828 paid yearly, in the first year, nearly 40% of it is going toward your interest. Click into the PDF for actual numbers, and labels in the chart.
As you can see, your interest rate is primarily what kills you. I generated 6 graphs, for four, five, and six year loans, with 9.9% interest, and 2.9% interest. The 2.9% rate is what I got for my loan in February, 2005.
To give you a comparison, I have a credit score of 770 (or 780 according to Equifax iirc), and qualified for 2.9% back in February. I "paid" $32,447 for my 2005 Sedan (Premium C, splash guards, trunk mat <-- trunk mat's a rip-off), and had an "out the door" price including TT&L of $35,760. My loan schedule is up at http://www.hollinger.net/files/my_loan_schedule.pdf . Notice I pay < $2700 in interest over the term of my five year loan. You pay more than that in the first year alone of your proposed loan from the dealer.
You should look into a credit union or a bank to finance your vehicle if your dealer will not budge. 9.9 is very much going to hurt over six years. For that matter, why are you financing over six years? Does approximately $100 / month make that much of a difference in your month-to-month cash flows?
If you want me to re-run the graphs with "real" numbers for your 2003 or 2004 with a down payment, provide the loan amount you'd need including TT&L (your "out the door" price as its commonly known), down payments, rate, and loan length and I'll post back in the thread with the appropriate reports.
~ Mike Hollinger
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From: Cruising the waters of FL
Originally Posted by NaztyG
but my question is how does the apr work? do i pay 9.9% of the sales price every year? or what? how is everyone paying under 36k out the door or whatever i am very confused!!
They ARE paying under 36k out the door. Out the door means cost of the car, tax, tag, title, and any dealer fees.
The "extra" amount you keep adding in is interest. Do you think if you get a loan for 36k you only pay back 36k? You have to pay interest, and the lower you credit and longer the loan the more you pay. Loans are not a charity thing...
If you pay it off early, you will pay less in interest because it accrues over time.
Plug your numbers into this and you will see where your payments go - some to the principle (what you borrowed), and the rest to interest.http://realestate.yahoo.com/calculat...rtization.html Then run your numbers again showing you are paying an extra $50 per month and see the difference.
Good luck.
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Originally Posted by RBull
Nice amount of work Mike. Seems to me the best option for someone in his shoes is buy a car you can afford and not one that kills you with interest payments for a long period.
If anyone needs a loan analysis done, post, or PM, and I'll kick out the reports.
G'day,
~ Mike
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From: Mass
bout time for me to come to reality and know i cant afford this car right now, will have to settle for a used 03. hopefully get approved for what i want and save myself about $10k. thanks for all the help guys, i will pursure every option i can to get the 05 but will pro end up with the 03, thanks again
-Adam
-Adam
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Joined: Apr 2005
Posts: 6,876
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From: Cruising the waters of FL
Better to figure that out now then after its too late and youre killing yourself over payments. You will still have a **** load of fun in an 03 or 04, trust me. Good luck and dont go for all the add-ons when financing!
Originally Posted by NaztyG
bout time for me to come to reality and know i cant afford this car right now, will have to settle for a used 03. hopefully get approved for what i want and save myself about $10k. thanks for all the help guys, i will pursure every option i can to get the 05 but will pro end up with the 03, thanks again
-Adam
-Adam
but seriously, if you're in a bind and trying to figure out if you can afford this car by trying to stay closer to $500/month, then i think you definitely should NOT get this car. you have to remember that there are insurance payments, routine maintenance, and gas expenses, which will add up in the end. good luck though.
