I recently purchased a new car (Toyota Yaris). The sticker price is around $14k, but after the sales tax, finance charge, and some extras were factored in, that number jumped to over $22k. Ugh. The finance charge alone comes to almost $6k, and the loan terms are 11% interest over 6 years. My question is, if I pay off the car faster than the agreed terms, will the finance charge decrease? It seems like an obvious "yes," as interest is a function of time... and that is how every other loan seems to work. However, on my bill it appears that Toyota has charged all 6 years of interest up front, so I owe them the $22k no matter how fast I pay off the loan. That`s impossible, right?
2006-09-01 18:59:18 · 6 answers · asked by Bad-Bird 2 in Cars & Transportation ➔ Buying & Selling
If you pay the car off early (a very good idea!!) you will pay less interest. To prove this to yourself, call the finance company and ask for a payoff figure on your loan. This is what it would cost to pay the loan off today. That figure should show you that you only pay interest during the time you use the money.
2006-09-01 19:58:07 · answer #1 · answered by fire4511 7 · 1⤊ 0⤋
Well all those "extra" charges didn't come out of the blue. What had to have happen was you bought an extended warrenty. Thats were most of your charges came from. Now depending on what dealer you go to will determine how much they carge for a document fee. Like at my store its $99.00. Now if you had a trade in that you owed money on, the remaning ballance will be rolled over to your new loan. Thats called being up side down. Now your intrest rate isn't a bad one. They come up with that number from your credit score and the lender you finance with. So theres where your extra charges more then likely came from. Now if you do pay the loan off faster then the term then yes your finance charge will drop. And it will look a little better on your credit report. I think you got a pretty good deal if you ask me. Hope I could help.
2006-09-01 23:55:01 · answer #2 · answered by Matthew L 1 · 0⤊ 0⤋
why in the hell would you buy a yaris!??... anyway what are those extras? 14k gets very minimum car, manual windows and locks, crappy stereo, crappy seating surfaces, few goodies... how much was the total before the tax, but including the add ons you got with it. anyway you shouldnt have got 6 years at 11% thats crap. trade it in at ford for 0.0% financing for 6 years. you may not recover all your money from the trade in but its worth it to stop paying 11%.
2006-09-01 19:12:10 · answer #3 · answered by Anonymous · 0⤊ 0⤋
First of all your interest is way too high.
Second go to the bank and refinance the loan for less years.
Third, the next car you purchase, buy it at 0% interest or pay cash.
2006-09-01 19:03:23 · answer #4 · answered by Trollhair 6 · 0⤊ 0⤋
Read your contract. Some of them have a penalty for paying off the loan early. First rule,
NEVER SIGN ANYTHING YOU HAVEN'T READ AND UNDERSTOOD!
Second rule:
SEE FIRST RULE!
2006-09-04 17:55:45 · answer #5 · answered by Ice 6 · 0⤊ 0⤋
DOUBLE THE PAYMENT EACH MONTH AND YOU'LL PAY IT OFF SOONER WITH LESS FINANCE CHARGE.
NEXT TIME DONT BE SUCH A RETARD, TAKE SOMEONE WHO KNOWS ABOUT BUYING CARS AND NOT GETTING RIPPED OFF LIKE A BLIND MOUSE.
2006-09-02 03:38:14 · answer #6 · answered by Laff 1 · 0⤊ 0⤋