What am I missing here guys?

I have gone to 3 dealerships and all seem to have a calculated monthly charge for 100 dollars over what my calculation is.

The car is $18,000. I am putting down $4,500.
18,000
- 4,500
=
13,500

$13,500 x 0.0625(tax is 6.25%) = 843.75.... 13,500 + 843.75 = $14343.75

$14343.75 + $200(title & L) = $14543.75

$14543.75 x 0.18(%18 percent interest rate) = $2617.88

14,543.75 + 2,617.88 = $17161.63

So...I would be financing $17161.63

17,161.63 divided by 60 = $286 bucks a month

I have been getting quotes like 500 a month and 375 a month from the nissan dealerships. Am I missing something here or does this sound right what they are telling me?

 

i don't think dealerships use "simple interest". i think the interest u are charged is based upon the money you have left over after each projected payment u plan to make (compounded).

 

can you explain?

 

18% intrest...OUCH! Your off because your going to pay 18% Intrest a year on total amount owed. Your gonna end up paying like $30 Grand for that Maxima by the time you finish paying it off.

 

simple interest is taking a figure and breaking it down over a sixty month period but with the compund i take the principle after each 12 month perion and multiplys it by the 18% then you divide that by the ammount of payments and you get the 350 a month payment........been 4 years since freshman algebra but i think that is how it works. if i am wrong please dont shoot me, just correct me.

 

Compund interest: Interest paid on the original principal balance, and on the accumulated and unpaid interest.

Here's an auto loan calculator that should be helpful....

http://www.bankrate.com/gookeyword/a...calculator.asp

For more details, just Google "compound interest" or something like that....

 

Maybe not $30 grand but close to it probably more like $27.500. The bottom line is you either have **** poor credit or no credit history to speak of. Your best bet would be to join a local credit union and take out a loan from them . Worst case would be around 10% intrest once you have established a relationship with them. This is probably not what you want to hear but I would walk rather then pay anyone 18% intrest. Or take that 5 grand you have saved and save a little more & buy yourself a 2000 Maxima for around $11.000. Good Luck

 

I have a figure of paying 26,000 thousand by the time its paid off. still a lot

 

i just called my buddy who is a math wiz and he basically told me that the way they do it is basically like i said but broken down monthly like a credit card. so they are charging you an apr based upon the principle after a years time and you make average payments. each time you make a payment the you pay more toward the principle so like your first payment might be 99.9 interest and .1 percent principle but at the thirtith month you are paying 50 50 and at the last payment it is 99.9 principle and .1 interest no way aroud it other than getting a lower rate

 

the formula is not that simple..
i know cause i took a discrete mathematics class last semester .. i forgot what it was but its pretty detailed.. i'll look it up and post when i find it..

 

WOW… I hate math but I know one thing a $26,000 for $18,000 thousands dollar car that is a lot... it’s none of my business, but it doesnt worth it

 

Lease a car if you want to make $280 payments, second go to www.edmunds.com and check out the prices and true market values.

 

Yes, that's how it broken down, it's not like you're paying interest based on each month, it's based on a period of the loan term and the APR. So 18% is extremely HIGH for these days, sound like you have crap credit.

 

Seriously, I just financed my 2000 SE and got 7.9% and I'm 19 years old with virtually no credit. You need to build better credit which takes a while, or get an account through a credit union and establish a good enough relationship with them that they will give you a loan.

 

If you want to cry, go to a loan calculator website (here's one: http://www.bankrate.com/brm/auto-loan-calculator.asp) and click the button that says "show/recalculate amortization table."

You'll see on a $14543.75 loan over 60 months, the first payment should be about $370 and only about $150 goes to principal...the other $220 goes to interest. Also, over the course of the loan you're going to pay $7615.19 in interest.

If the best you can do is 18% you're better off not buying the car and getting a junker for a year while you bring up your credit rating and bring down your interest amount.

 

I am going to have it put in my parents name so the interest rate is low. does that sound like a good idea.

 

If they'll do it, yes. Then work on getting your own credit rating up. You're not going to accumulate anything toward yourself for this if you put it in your parents' name, so you should get a credit card and start making small puchases on it and paying it off.

 

But remember if you put it in your parents name don't do anything stupid on the street. They will be responsible for everything you do.... Anyhow.. the 18% represents the No credit situation in which you are....I might say that you have between 17 and 20 years old.. it happens.. Do this.. go to Sears, apply for the card...buy a pair of jeans.... wait until the end of the month and as soon as you get your statement... go and pay the minimun the first time... when you see that the next payment is up pay it in full. Keep doing it for three months... you have to owe someone money in order to get credit..it sounds stupid but that how it works. I'm an accountant and try to work with people in financial problems.... but in our case it sounds like you can pay for the car..but at 18% don't do it......... Remember this.. you willpay for your mistakes in the future so plan it wisely...!!!!

 

have your parents co-sign a loan...simple.

if your parents wont do it, get new ones

 

how much can you afford? if you ask you parents to cosign for a loan, I would recommend you guys go to a bank and get a preapproved loan, so at least you know what your limit is, and this also gives you a little leverage, when negotiating with the dealer, since you know what your ceiling is. with the money you are going to put down, put that down on the pre approved loan(provided you have both the down payment and the loan) so you dont get killed on the compounding interest.

generally a preapproved loan is the way to go rather than going to the dealer and getting it financed.

 

You're thinking insurance, he's talking loan. They're separate.

 

18% interest is too high. mine was 6% without any credit. dealership first told me 18% but when i started to walk, they lowered it and kept lowering it til i was happy with the rate. those interest rates are never final. they try to stick you with the highest rate they can first. Also, with your calculation, its not a simple interest. you have to calculate it using compounding interest. The rate is compounded daily so each day you dont pay them, they charge more interest.

 

Ahh nope, I'm talking both...... but if he crashs the car and somebody get hurt his parents are responsible for it..... it doesn't matter, whoever is on the title is rersponsible regardless of the insurance.........

 

Very true, but that's what "GAP insurance" is sold for. It pays the "gap" between loan payoff and what the insurance pays. Many insurance companies sell their own version of GAP insurance if the dealer is charging too much. A good price is around $295.00 for a decent GAP insurance policy.

 

Hmm, I did not know that.

 

When requesting a quote from the dealership, ask them to give you the copy of the contract. Do not sign anything @ this point. You should be able to see the proper disclosures made on everything, the total sales price, taxes, tags, amount financed, and the interest rate they are giving you. Dealers make money on selling loans, therefore, they are inclined to sell you a higher-interest loan that will give you higher monthly payments. You gotta be realistic as to what kind of interest rate you may count on: if you have a good credit history, have a full time job, over 21 yrs old, then you can count on like 3.9-5.9% on a used car. If you have no credit, slow credit, or bad credit, then thats where they make more money on selling you the high interest loan then on the car itself. You gotta negotiate your way around in all cases.

 

Like everyone has said, 18% bites. If you are financing 14550 (principle + tax + T & L) for 60 months (5 yrs) at 18%, my calculator figures app $370 per month. Also, if your parents cosign, then they are taking on responsibility for the loan. If you miss payments, your parents will have to pay and if payments are late it effects their credit. I've been down that road with my son. Just make sure you can afford the payments (for the cosigner's sake) and good luck. BTW, 370 x 60 = 22200.

 

I'm not talking about GAP insurance... I know what it is for.. I'm just saying that if he has his parents signed as cosigner.. they are responsible for everyting he does in the car. So if get in trouble with the car somebody can sue his parents for damages... No GAP insurance is going to cover them. The insurance on the car will go as high as the cover itself, then the people can go after his parents assets claiming that they are responsible for what happened. Hopefully this will clear my first answer....

 

Get a co-signer. My grandma went with me when I got my maxima. Actually they delivered the maxima to her house (which is 1hr away from the dealer) and we signed all the papers there. I got 1.9%.