Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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At that time I didn't know you-know-what from shinola but I wanted to read all the fine print in the contract. I noticed the rule of 78 and I knew this wasn't a good thing but we went ahead with the deal anyway. This was before the laws that required APR notice so I asked the salesman what the interest rate was. He said "around 6%".
It wasn't until years later that I looked at the figures again and realized that the true interest rate was closer to 12%.
Trust but verify.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
What a nice gesture on your part! Could there have been a more touching way to show your love?
Well?????????????? Did you hold up your end of the deal? Did ya marry Her?
Not really. The "rule" is just a way of calculating (i.e. estimating) your refund in case you pay off the loan early. "Frontloading" actually makes sense and is reasonable. For example, until the first payment is made, you have had the use of the entire principal and you're paying interest on the entire principal.
After making your first payment, you've paid back a (small) part of that principal. During the second period, you have had the use of a smaller portion of the principal so the interest on your second payment is smaller.
The problem with the Rule of 78 is that it invariably underestimates the refund you are due and favors the lender. It can be quite costly on longer terms loans at higher interest rates.
tidester, host
SUVs and Smart Shopper
Are you kidding??? A woman who would buy me a car just for the asking? Of course I did.
The car lasted for 13 years and I sold it for $350. The marriage has lasted 31 years and I hope she never smartens up and gets rid of me. Despite the 12% interest it was the best car deal I ever made.
BTW, I think bobst was at the reception. He was the one who threw up in the punch bowl I believe.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
*To qualify my question a little bit, special means significantly lower than what a bank would give a consumer with excellent credit.
*To qualify my question a little bit, special means significantly lower than what a bank would give a consumer with excellent credit.
If you mean when we floor plan them then no. We pay prime + 1 which right now is 8 something. It may differ from manufacture to manufacture though. Or if you mean like when we buy a car for a courtsey car or a parts truck or something then you can get the same any business can. Though we usually just pay for ours.
Why is that? I can borrow money at prime, without security before you get the idea that I am talking about a HELOC or similar. Admittedly my credit is good, but even so it surprises me. It sounds to me that you are restricted as to where your dealership may borrow from.
It isn't a traditional loan. All you are paying them is interest, no principal. You pay it on whatever the total amount you have floored is. There is no term, you just pay it till the unit sells. To give you a very broad example, we floor probably around $10,000,000.00, after credits, hold back, and floor plan incentives we pay around $50K a month. Some months there are a credit other months are an expense. That varies from month to month depending on inventory level. That is just are floor plan, does not include the insurance umbrella we are required to have on the cars.
How long does a dealer expect a car to be in stock? Is 1 year reasonable? 6 months?
If I understand Holdback correctly, the manufacturer assumes a minimum (maybe maximum) of 3 months.
But it is my understanding that we are free the first 30 days. So if we turn it in the first 30 form the day it gets released to us (that is not when it is here but released from the plant to our inventory. There is usually a 10 day lag) after the first 30 we are paying floor plan on it. After cars have been here 90 days that is getting old. I am sure there is a formula that tells us when the hold back has been eaten on a car by floor plan but I don't know what it is. I just went and looked and our oldest unit in stock is a 500 we have had since September of 06.
We were fortunate this year that the programs were strong on our 06 close out so we have no 06's left in stock. We have had occasions where we would have 10 or 15 in stock for over a year.
As far as accounting goes, yes they do forcast as to what the expense will be for the following month and apply it accordingly
I demanded my 06 sonata back instead of taking the 07 sonata. The are stalling and wont give it back, insisting i must take the 07 even though the finance was not approved on the paperwork i DID sign.
Now they say, they got it approved on the papers i did sign but wont tell me who it has been done thru.
I signed the orginal papers on march 20 and the placard expires on april 18th. Also no greenslip yet.
I think they are bluffing hopeing i will cave. Any suggestiosn?
They must somehow get the deal done at the terms that you originally agreed, unless there is a different provision in the contract you signed
They must unwind the deal
You must agree to a new deal
You have made it quite clear you don't want option 3, so unless they manage option 1 you are left with option 2. I'd hold out for that if it were me. You should read your paperwork carefully to determine exactly what you agreed to in the event that the financing fails.
Please respond to jfallonedmunds.com no later than April 25, 2007 with your daytime contact information and a brief description of your purchase and your trade-in, if you had one.
As i am in the middle of refinancing my house and it will be done by Friday, i don't want the dealership to run my credit till Friday.....
Therefore, my question is that how does the process work ?? does the dealership has to run my credit first and then they talk about pricing ??? can i ask for a price quote and hagle the price before they run my credit ??? Please advice...
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2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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If they persist on running your credit just tell them this.
For now I just need a price. Because if we can't agree on that there won't be anything to finance.
If you have good credit it will not be an issue. I get people with good credit loans all the time with "Letters of intent to hire" all the time. Meaning that they are between jobs but do have a letter stating they are starting a new one.
Any suggestions for how I can move forward with this? Also-if I put down a deposit, and the vehicle does not match my specifications or the deal sours for some reason, will I lose that deposit? They haven't asked me to put down a deposit, but I'd hate to lose out on this car.
Thanks for any and all suggestions.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
Normally that is true, but USAA usually has some of the best rates around. I can rarely beat there rates. Heck I usually can't even match them.
They have queered many a finance deal for me. When you call to update your insurance they will ask if you financed the car, then they will ask the rate that you got. Then they ask if they beat it by a 1/4 point will you finance with them :mad: :mad: .
So now what I do is if they call from my office I will ask the rep first what the insurance rates are. When he/she ask me why I tell them that I am might be able to find the customer a better insurance rate. They get offended and I will say, "hey I will make a deal with you, you don't try to steal my loan and I won't refer these folks to my buddy at state farm
All they are doing is cherry picking loans, I do all the work and they swoop in and screw me by stealing my loan.
In the case you have with the dealership concerning the contract. The first contract you signed was a legal document but can be changed by the dealership and/or the finance company. When you sign the contract and they let you take delivery of the vehicle and then call you back and tell you what they told you it is called "spotting." They spot you the vehicle and then call you back and tell you you need to resign and to your surprise when you do go back in the interest rate has gone up or the money down that is required has increased. Most all dealerships use this method for trying to make a little more money if they didn't satisfy their craving the first go around.
You may be asking if this is legal. The sad thing is that it is perfectly legal and is in writing on the contract you signed. Most of the time it is located on the back but may be on the front. In a nutshell it says that the contract can be changed by the dealer and/or the finance company up to a certain amount of days after the contract is signed. Most of the time it is 5-7 days, usually 5. I would suggest reading that so you will know what the policy is for that specific dealer.
Sorry for the long reply but I wanted to explain the situation as detailed as I could. Hope this helps.
Are you sure about that? in 13 years I have never seen any subject to verbage on a retail contract. The subject to form is carried as an addendum to the retail contract on a separate piece of paper. The fiance companies do not supply the addendum either. They have nothing to do with it. They are usually an in-house form used to protect the dealer from customers who falsify an application after hours when you cannot verify it. It is also used by shadey blood sucking dealers to soak the uninformed consumer for a few more $$'s.
A contract cannot be changed by the finance company. It can be returned to the dealer if it is incorrect but they cannot change anything. The dealer acts as there agent until they accept the contract.
An '03 Jetta can't be worthless.. Is your payoff on the lease $10K? How much longer do you have?
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Apparently it works like this:
You get a credit card with $4,000.00. You draw part of the money, each month from this card, add your own money from your own pocket. This combines into a larger payment than you would otherwise be able to make, thus bringing down the balance quicker.
Then after 2 yrs you go back and refinance at the balance, which is significantly less, is the claim.
There is no money down, and no payments for 4 months.
Has anyone had any experience with this, or know about it? Advice? Are there pitfalls?
Anything??????
Personally I have not heard anything so I can't help him (my friend and his son), but I promised to see if I could dig up anything. So I thought I would toss this out to everyone and see if anyone had any input.
Thank you all.
You would not even of had to say this was A Mitsubishi dealership and I would have known.
What if you can't refinance when it is time in two years? Then you have a carpayment you can't afford and a Credit Card with a $4K balance you are making payments on.
Sounds like a good way for someone to set themselves up for failure to me. And I would do anything to talk your son out of it. Either he can afford the car or he can't under a traditional loan.
It sounds like something out of "King of Cars".
I guess next they will be suggesting that people knock over a bank as a quick way to come up with the down payment.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
After the 2 years is up, this kid will find that he owes $20k on a car worth $10k. Not a good situation.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
So you think he'd (the son) be better off w/ straight financing even tho the payment is higher?
Thanks all for your posts.
1. DELAYING full payments until a later date.
2. charging more for the vehicle and putting that extra money on a debit card that can be used to make payments. in other words (and i just thought of this and think its a brilliant marketing scheme), let's say there is the $2k rebate on the vehicle. Instead of the rebate coming off the price of the car, they put the rebate on a debit card and the buyer uses that rebate to help make payments.
Either way, it is a REALLY bad move. The only way to really get the point across, however, is to add up the entire cost of the vehicle over the life of the loan. I bet he finds that conventional financing, while the payment is seemingly higher, will result in a lower overall cost.
ANYWAY, the final point to all of this is, if he can't afford the car through conventional means, HE SHOULDN'T BUY IT!!
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
Tell him to look on the BBB or Ripoff.com sit.
He won't find anything because it is not a "program" it is a dealer hatched scheme.
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
Review your vehicle
Who did you buy this car from, Loan Shark Autos Inc.?
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
(ii) ... but since we don't know how bad your "credit issues" really are, maybe they just fought really hard to get you something, who knows.
(iii) at any rate, it's water under the bridge now. What you *should* do is refinance at the earliest opportunity, an opportunity which will surely arrive after you made a few month's payments. Perhaps you should refinance twice; now and in a year or two. It all depends on your credit. Call the lender and ask about the payoff. Join a credit union -- easy for a student -- and work with them.
(iv) I don't have time right now to "back out" the price from your payments. BUT, and you can do this in your head, 70 x 350 is roughly 7 x 7 x 500 or $25,000. The car is perhaps worth 1/2 of that, probably less. But the interest should be six years times ~15% of the total, or almost half the total. Maybe half; I don't do compounding well... So with luck, the payoff is $15 or less and you'll be OK.
(v) As a college student, you should be able to do a little math, preferably before you sign on the dotted line.
Good luck,
-Mathias