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How Much Car Can You Afford?

Edmunds.comEdmunds.com Posts: 10,059
edited April 2017 in Editorial
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How Much Car Can You Afford?

Learn how to use Edmunds' Car Affordability Calculator, which helps you estimate how much you can afford for a car, based on your desired monthly payment.

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Comments

  • Thanks for this article
  • tobester1tobester1 Posts: 8
    edited June 2016
    A general question, is the interest rate that you and the dealer agree upon and is on the contract the actual interest rate? Is it possible or legal that the actual rate could be higher, perhaps much higher?
    The car I owned before my current one was a car that in hindsight, I never should have bought. Once I was venting about it on an online message board. Someone asked me about how much the monthly, payments were, how much the car cost, how long the loan was and the total amount of the loan.
    After giving him, the answers he ran the numbers. He determined that I was paying 29 percent interest. "What kind of idiot pays 29 percent interest for that kind of car?" he asked.
    I didn't answer but I guess my answer should have been "The same kind of idiot who saw 4 percent on the contract."
    Is it possible that the interest rate really was 29 percent and I should have run the numbers before agreeing to buy?
    Or could it be that maybe I just forgot to add into the amount that was finaniced the registration transfer fee, sales tax, GAP insurance and service agreement?
    Or, maybe, I just didn't have the actual numbers available when I answered the question, gave him a figure that was way off and he based it on that. Often, unless I have the numbers right in front of me, on a screen or on paper,m I really can't tell people the exact numbers (which is probably a bad thing) and I tend to take a guess which is usually way off.
    I don't see how anyone can legally charge anything other than the rate in the contract. How could a reputauble dealer risk a lawsuit or criminal prosecution doing such a thing?
    I know car salesman can and do play fast and loose with the truth, but this does not make sense to me.

  • kyfdxkyfdx Posts: 128,360
    tobester1 said:

    A general question, is the interest rate that you and the dealer agree upon and is on the contract the actual interest rate? Is it possible or legal that the actual rate could be higher, perhaps much higher?
    The car I owned before my current one was a car that in hindsight, I never should have bought. Once I was venting about it on an online message board. Someone asked me about how much the monthly, payments were, how much the car cost, how long the loan was and the total amount of the loan.
    After giving him, the answers he ran the numbers. He determined that I was paying 29 percent interest. "What kind of idiot pays 29 percent interest for that kind of car?" he asked.
    I didn't answer but I guess my answer should have been "The same kind of idiot who saw 4 percent on the contract."
    Is it possible that the interest rate really was 29 percent and I should have run the numbers before agreeing to buy?
    Or could it be that maybe I just forgot to add into the amount that was finaniced the registration transfer fee, sales tax, GAP insurance and service agreement?
    Or, maybe, I just didn't have the actual numbers available when I answered the question, gave him a figure that was way off and he based it on that. Often, unless I have the numbers right in front of me, on a screen or on paper,m I really can't tell people the exact numbers (which is probably a bad thing) and I tend to take a guess which is usually way off.
    I don't see how anyone can legally charge anything other than the rate in the contract. How could a reputauble dealer risk a lawsuit or criminal prosecution doing such a thing?
    I know car salesman can and do play fast and loose with the truth, but this does not make sense to me.

    Seems doubtful that you paid a different rate than what is on the contract.

    Seems more likely you were estimating, or left off a bunch of items, and didn't give the actual amount financed.

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • tobester1tobester1 Posts: 8
    That's what I thought.
  • kyfdxkyfdx Posts: 128,360
    tobester1 said:

    That's what I thought.

    Also, keep in mind..a lot of people don't know how to reverse calculate an interest rate from the other information. An amortization calculator helps a lot with that. I can estimate it pretty quickly, but I still use an on-line calculator to get exact numbers.

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

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