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Buying new car: how to calculate interest charged?

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Buying new car: how to calculate interest charged?

Old 07-09-06, 10:13 PM
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Buying new car: how to calculate interest charged?

I am considering buying a new car in the near future, and was wondering what is a way to calculate the interest charged? It seems when you shop for a car, "interest rate" is taboo to be spoken, and they just want to give you payment amounts and see how much you squirm, and I want to be able to calculate how much interest they are trying to charge me but do not know how to do that.
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Old 07-09-06, 10:58 PM
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If the dealer won't clearly explain the rate to you, find another dealer, they are pulling a fast one on you.

or

get your own financing and just work on the total price with the dealer

http://www.eloan.com/s/show/landingp...utrtst75bkrart

Or get your own financing and tell the dealer he has to beat it.

This loan calc may help you figure it out if you have a fairly good idea what the numbers should be

http://www.bankrate.com/gookeyword/a...calculator.asp
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Old 07-10-06, 06:16 AM
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Discuss financing only after you've decided on the price.

Once you have financing, say the payments are for four years and are $250. Multiply $250 x 48 and subtract the price (let's say it was $10,000). That's $12,000 - $10,000 = $2,000 paid in interest, which of course is less if you have a shorter term loan or pay the loan back faster.
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Old 07-10-06, 06:24 AM
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By law, they have to tell you the APR if you ask. Be insistent, then be threatening, then make good on your threat and report them. (Stage 1 usually resolves it)
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Old 07-10-06, 05:07 PM
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If you're just guesstimating at the dealer... a $20k loan @ 5 years is around $9-11/mo per 1%.

Calculator is at http://www.bankrate.com/brm/auto-loan-calculator.asp

And if they're too pushy, or you think they're messing around with you, just leave.

If they ever call you and ask if you're still looking, say NO. If you tell them yes, you're just going to get unwanted calls every couple days.

Never let a dealer drive you to another lot. Earnhearts in AZ once drove my parents to another nearby location to show them more cars. My dad offered to drive. But they were like "no-no, we'll take you in the company van". When they didn't see what they liked, the dealer actually became really, really pushy. Then he started to sob about it, and pushed things on my parents like 'I'm just trying to get you this car today because I need money for my family'-type stuff. Pops had to get ...uhhh... stern with the guy. I'm sure the car ride back was very akward.
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Old 07-10-06, 06:26 PM
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Originally Posted by The Bus
Discuss financing only after you've decided on the price.

Once you have financing, say the payments are for four years and are $250. Multiply $250 x 48 and subtract the price (let's say it was $10,000). That's $12,000 - $10,000 = $2,000 paid in interest, which of course is less if you have a shorter term loan or pay the loan back faster.
Pretty much it. If you then want to work out the APR, then you should be able to reverse engineer it from these figures.

Only other thing I would add is that if you can get a "cash" discount (ie the $10,000 car could be bought for a cash price of $9,000 then the effective interest is $3,000) then you need to factor that in too.
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Old 07-10-06, 10:37 PM
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Originally Posted by troystiffler
And if they're too pushy, or you think they're messing around with you, just leave.
I did that one time. The dealer just refused to give me an actual rate. They gave me a bottom line total for a monthly payment after nearly 2 hours of jerking around, test drives, more jerking around, and negotiations. But because they could not give the rate they were charging, I just left. In retrospect, it was a bad thing that I left, and I regret it to this day. They were willing to put me in a used Toyota Camry (and it wasn't that old-just a few years, and had low mileage) that sold for about $12,500.00 plus give me a check that day to pay the taxes on the car for about $210.00 per month. Fooling around with the bank rate calculators after the fact, that was pretty damn close to 0% apr as I could get. Why the hell didn't they just tell me that??? Since they were refusing to quote me a rate, I didn't want to get screwed (I already went through that with my first car purchase...I took the first monthly payment quoted, and that was a bad mistake on the other side of the spectrum.)

Those online calculators rock, but I was curious if there was a simple formula to use on a hand held calculator.
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Old 07-10-06, 10:55 PM
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Originally Posted by calhoun07
Those online calculators rock, but I was curious if there was a simple formula to use on a hand held calculator.
never work solely with monthly payments. Don't ever tell them what you think you can afford in a payment, unless you lie and make it real low like $100/month.

You can use the online calculators to get some ROUGH estimates of what it will cost per $1000 borrowed and do the math in your head real quick.

For example, 5 year loan, 7% interest rate will roughly be $20/month per thousand dollars borrowed.

20,000 loan, 5 year term, 7% interest = roughly $400 per month ($20 * 20) the second twenty comes from the 20,000 figure you borrow, that is 20 - $1000, so the loan costs $20 per month for every $1000 borrowed. $21,000 would be (very roughly) $420/month payment.

You can run different calculations with the calculator - take the same numbers above, but change it to 5% interest and that is roughly $19 a month per $1000 borrowed.

You can figure that out in your head while you are sitting there.

BTW - there is no cash discount, if anything, it is the other way around. There is a discounted price on the car if you finance it because the dealer gets a kick back on the finance (unless your credit is in the shitter and you have no money down).

As a cash customer, I usually go through all the hassle to finance 1/2 the value of the car (this ensures you the best rate since the bank is taking no risk at all with half down) and then pay that loan off in a month or two. This also does wonders for your credit score
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Old 07-10-06, 11:22 PM
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Yeah, car places will try to fuck you if you tell them how much you want to pay per month.

For example, I bought a Mazda 6 a few weeks ago. They came in at a price of $375 x 72 months. Doing that math, that's $24,300. While that would be fine if I was putting no money down for the model I chose, I was plunking down $5,000 with an additional $3000 in rebates. That means I would've been paying more than $8,000 for the car than the MSRP.

Always go in with a number you have in mind you want to pay (www.carsdirect.com is a Godsend for this) and if they won't work with you, walk away.

Last edited by Deftones; 07-11-06 at 12:45 AM.
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Old 07-11-06, 12:03 AM
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Can't recommend this site highly enough.

http://www.carbuyingtips.com/
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Old 07-11-06, 07:34 AM
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Get financing at a credit union before you even walk in the door.
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Old 07-11-06, 07:45 AM
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2 other sites that can help out...with the buying process as a whole too.

www.truedelta.com and www.fightingchance.com

You will be a car buying Jedi...
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Old 07-11-06, 10:18 AM
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Originally Posted by Deftones
They came in at a price of $375 x 72 months. Doing that math, that's $24,300. While that would be fine if I was putting no money down for the model I chose, I was plunking down $5,000 with an additional $3000 in rebates. That means I would've been paying more than $8,000 for the car than the MSRP
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Old 07-11-06, 03:05 PM
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Originally Posted by badlieut
Get financing at a credit union before you even walk in the door.
I guess the thing I don't like about that approach is people I have known who have done that before had to cough up more money when the deal is closed, I guess for financing fees, or whatever the dealer is willing to tack on at the end, and I've found dealers are not terribly up front about those closing costs.
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Old 07-11-06, 03:17 PM
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Originally Posted by calhoun07
I guess the thing I don't like about that approach is people I have known who have done that before had to cough up more money when the deal is closed, I guess for financing fees, or whatever the dealer is willing to tack on at the end, and I've found dealers are not terribly up front about those closing costs.

This is simple. Get a loan from E-Loan

https://www.eloan.com/s/show/autoexp...A&user=&mcode=


Put in the MSRP cost of the vehicle as your approval amount (you can get msrp from www.edmunds.com), this should be way higher than what you are actually going to pay (or at least if should be).

They send you a check that you write. Take that check to the dealer and fill it in for the lesser amount and you are done.

Banks do this everyday. They understand that you don't know the exact cost of the car until you have signed on the dotted line.

Also, I would tell the dealer to stick any undisclosed fees up his ass. Getting your financing from elsewhere may even help you do that. you can say here is my check for $xxxx.xx and I want that car, take it or leave it.

You are not here to make sure the dealer feels good at the end of the day. You are here to get what you want without getting ripped off. Stop looking out for the dealer or trying to make things easy on the dealer, you will only get screwed.
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