Ok all you math geniuses can you give me a hand. Im trying to figure the interest rate on a car.?

Question

Ok, I have a sub prime lender because I dont have he greatest credit. I think Im paying more than I was told for interest though, unless im figuring it wrong which is why I can use the help of anyone better at math than I am.
The cash price of my car is $19,990.00
Document Fee +$198.00
Lien + $1.00
Subtotal $21189.00
Sales tax financed + $1001.28
Total Sale Price + $21190.28
Trade In -$3500.00
Cash Down -$1000.00
Balance Due $16,690.28
Monthly Payment is $426.36
for 60 months = $25581.60
(it could be 61 months) which would add up to be
$26007.96
What is the interest on the loan. Please help. I dont have the contract with that info???

maybe Im asking it wrong.
What is the annual percentage rate on the loan?

What is compound or non compound interest???
You guys are very informative thank you btw.

You guys are great, Thanks so much. I do know it is a really bad rate, I actually knew that going in, because my credit is what it should be. But I went ahead and went for it anyhow to help improve my credit, i figure< and I've been told that if I keep my payment on time, I can refinance after a year. I hope so, because this amount is really awful. Thanks again everybody. 18.3 Rounded to the nearest tenth sounds like what i was told when I first bought the car..

Answer 1

This is the least funnest to figger, 'cause it requires iteration:
For a quoted interest rate of r,
the monthly interest i = r/12
Principal P = $16.690.28
duration n = 60 months (61 months is unlikely)
payment p = $426.36
The formula for calculating the payment is
p = iP/(1-1/(1+i)^n)
iP = p(1-1/(1+i)^n)
i = p(1-1/(1+i)^n)/P
i = p(1-1/(1+i)^n)/P
i = 426.36(1-1/(1+i)^60)/16.690.28
1st guess i = 0.18/12 = 0.015
i = 0.015089775 (+0.6% error)
2nd guess i = 0.185/12 = 0.01541666667
i = 0.15344 (-0.47% error)
3rd guess i = 0.01538
i = 0.153222==>.015287==>0.0152656==>0.01525266==>0.01524475==>0.0152399==>0.015237011
0.015237011*12 = 0.1828 which rounds to 18.3%

Answer 2

The total interest over the 5 years is 53%/55% depending on 60/61 months.

Now how this interest is calculated I can't say - if it is compound interest then this would probably be a reasonable rate of around 7/8% apr ish if it's not compount interest then you are paying 11% apr which is not too bad really.

Answer 3

You have to ask your car dealer the following questions.
(1) Am I being charged interest only for the car or for all the taxes put together.
(2) Is it compound interest or simple interest.
(3) If it is compound interest is it being charged monthly or yearly.
(4) Is the compound interest being charged on what I have remaining which is to be paid or is it being charged on the amount at the beginning when I got the car.
Then you have to come and tell us the following information in order for us to calculate the right interest rate in order to find out if you are being ripped off or not. Don't worry we are there.

Answer 4

I hope you realise that there are answers for the same problem a few back. Take the percent interest rate I found and divide it by five to get an annual rate.This is the effective rate. They may claim that the interest is calculated on what you have not yet paid off on a monthly basis .The interest rate for this is less than the overall effective annual interest rate and it is tedious to calculate.

Answer 5

High! First of all, make them give you the contract with that info. But they're car dealers, so they will give every excuse not to.

You're paying $8891.32 in interest (60 months) on a loan of $16,690.28 . Interest works out to 53.27%

Grab a calculator and divide the amount of interest by the amount financed (8891.32 / 16690.28 = .53272443601) and bounce the decimal point two places.

They'll try to spin it in their way (monthly, compound, APR, whatever, but lookiing at the base numbers... reality sets in

There are only three true numbers... amount financed divided by interest paid equals percentage

Answer 6

18.279 interest rate.

monthly payment =
total payment( rate / 12 (# of months)) / 1 - (1 + rate / 12) ^ # of years

It’s a horrible rate... I would go to the bank and ask for a loan instead since there interest is probably much lower. Even credit cards have a lower rate...

Answer 7

I get that it is exactly 18.279% per annum, broken down to a monthly rate of 1.52325%. This uses a spreadsheet I created for my own purposes, to calculate all the payments in a schedule like this.

The formula is
A * (1 + m)^N
=
p * [ (1 + m)^N - 1 ] / m

where
A = Amount financed
m = monthly interest rate
N = total # of payments
p = montly payment amount

Answer 8

Well regardless of what all of the fees are you still are going to be paying interest on the balance due. That interest looks to be around 35-40%. On a loan that is financed for $16k you are ending up paying $9k just in interest. I'd shop around if I were you to see if you can come up with something else.

Answer 9

Well regardless of what all of the fees are you still are going to be paying interest on the balance due. That interest looks to be around 35-40%. On a loan that is financed for $16k you are ending up paying $9k just in interest. I'd shop around if I were you to see if you can come up with something else.

Answer 10

Looks lovely dangerous.........approximately 10.five% a yr OUCH!! total it appears like over 50% while its all stated and performed in 5 years and disgrace on you for no longer studying and information the whole thing you signal i went together with your mortgage of 8891.32