Car loan advice

[John213]

Looking for some advice about my new car loan. Please no judgement, I'm only 24 and have $75,000 annual income, and have some savings and investment too. I just found this forum right now and I'm looking for some finance guru.

Everything I put below is on my purchase agreement, my new car loan is 60 months with 7.9% APR

Finance Charge (The dollar amount the credit will cost you) = $3569.65
Amount Financed (The amount of credit provided to you or on your behalf) = $16,395.95
Total of Payments (The amount you will have paid after you have made all payment as scheduled) = $19,965.60
My downpayment = $8500
Total Sale Price (The total cost of your purchase including the downpayment) = $28465.60

Monthly payment is $332.76

"You may prepay. You may prepay all or part of the unpaid part of the Amount Financed at any time. If you do so, you must pay the earned and unpaid part of the Finance Charge and all other amounts due up to the date of your payment. As of the date of your payment, if the minimum finance charge is greater than the earned Finance Charge, you may be charged the difference;the minimum finance charge is as follows: (1)$25 if the original Amount Financed does not exceed $1000, (2) $50 if the original Amount Financed is more than $1,000 but not more than $2000, or (3) $75 if the original Amount Financed is more than $2,000"

Sorry if I'm really new to all financial term. So what does it mean? Can someone give me an example? Will it matter if I pay $600 every month? or I have to pay the interest no matter what? Everything is confusing to me. But I want to pay the loan quickly, not in 5 years, probably just in 2 years. What would be the best strategy on my loan?

[JoeP]

Here is a thread with a similar situation. If this is your case, it sounds like you're on the hook for the full financed amount ($19,965.60) so paying it off early will not give you the benefits of knocking down principal faster.

Just a question, not judging: why are you taking out such a huge car loan? You're paying over a third of your income on a depreciating asset. Most here would suggest a used car paid fully or mostly with cash, especially at your age and income level. I hope you don't have any other debt.

[bjl584]

Looking for some advice about my new car loan. Please no judgement, I'm only 24 and have $75,000 annual income, and have some savings and investment too. I just found this forum right now and I'm looking for some finance guru.

Everything I put below is on my purchase agreement, my new car loan is 60 months with 7.9% APR

Finance Charge (The dollar amount the credit will cost you) = $3569.65
Amount Financed (The amount of credit provided to you or on your behalf) = $16,395.95
Total of Payments (The amount you will have paid after you have made all payment as scheduled) = $19,965.60
My downpayment = $8500
Total Sale Price (The total cost of your purchase including the downpayment) = $28465.60

Monthly payment is $332.76

"You may prepay. You may prepay all or part of the unpaid part of the Amount Financed at any time. If you do so, you must pay the earned and unpaid part of the Finance Charge and all other amounts due up to the date of your payment. As of the date of your payment, if the minimum finance charge is greater than the earned Finance Charge, you may be charged the difference;the minimum finance charge is as follows: (1)$25 if the original Amount Financed does not exceed $1000, (2) $50 if the original Amount Financed is more than $1,000 but not more than $2000, or (3) $75 if the original Amount Financed is more than $2,000"

Sorry if I'm really new to all financial term. So what does it mean? Can someone give me an example? Will it matter if I pay $600 every month? or I have to pay the interest no matter what? Everything is confusing to me. But I want to pay the loan quickly, not in 5 years, probably just in 2 years. What would be the best strategy on my loan?

If you pay extra make sure that the extra amount goes toward the principal and not toward the interest on the loan. Write "principal payment" on the check, then call the lender to make sure that they applied your extra payment toward principal.

[John213]

Okay. The dealer told me the bank would be Chase. I just got the mail from Chase today, and this confuses me.

It says on the letter that the Interest Rate is only 5.54% and there's a part in the letter says "If your recent auto loan / retail agreement provided for a prepayment penalty, please be advised that your account will not be subject to this charge if you decide to payoff your account early."

So what does it mean? And why did my APR decrease?


@Joe P

Just to answer your question, Yes, I don't have any debts and I have savings, I was gonna wait for couple more years to buy it cash but I can't, my 95 corolla died. Since I'm in the market for a car, I decided to buy my "dream car" and I will keep this for 5-10 years, and we are not talking about a 50 to 100 thousand car, it was only in 20 g's range. I know all the rules, like 20% downpayment, maximum of 10% of monthly income, etc. I mean, I'm not perfect, and I am working so hard and I think I really deserve to get what I want. I will try to payoff around ($8,000 / 2 years worth of debt) on the first year. But even though this is my first post, I've been reading in this forum for a while now and I've really learn a lot. Thanks.

[jpg7n16]

Okay. The dealer told me the bank would be Chase. I just got the mail from Chase today, and this confuses me.

It says on the letter that the Interest Rate is only 5.54% and there's a part in the letter says "If your recent auto loan / retail agreement provided for a prepayment penalty, please be advised that your account will not be subject to this charge if you decide to payoff your account early."

So what does it mean? And why did my APR decrease?

The way it reads to me is "I know your car sales agreemeent said there would be a penalty, but that actually won't apply to you."

What did Chase say when you called them about it?


If you haven't called them, you really need to. I'd pretty much phrase the call:

"I just got a new car loan with you guys as the lender - but I've received conflicting information and just want to clear up a few questions. 1) What is the rate I'm paying on my loan? 2) Is there any penalty if I want to pay it off early? 3) What's the best way to make extra payments?"

Then the Chase people who handle your loan, and see all the terms of it, and have the responsibility of taking care of you (their customer) - can explain what's going on.

[elessar78]

Just a question, not judging: why are you taking out such a huge car loan? You're paying over a third of your income on a depreciating asset. Most here would suggest a used car paid fully or mostly with cash, especially at your age and income level. I hope you don't have any other debt.

'Cause he's young and he's got a well paying job right off the bat. Are you an engineer, by any chance OP? I see it a lot. Our head honchos drive old pickups and old Accords and the 20 something engineers drive BMWs and Mercedes Benz.

But for 16K, it's probably like a Honda Civic or something. If that's what you have and this is your situation, run it as long as it'll go.

[John213]

The way it reads to me is "I know your car sales agreemeent said there would be a penalty, but that actually won't apply to you."

What did Chase say when you called them about it?


If you haven't called them, you really need to. I'd pretty much phrase the call:

"I just got a new car loan with you guys as the lender - but I've received conflicting information and just want to clear up a few questions. 1) What is the rate I'm paying on my loan? 2) Is there any penalty if I want to pay it off early? 3) What's the best way to make extra payments?"

Then the Chase people who handle your loan, and see all the terms of it, and have the responsibility of taking care of you (their customer) - can explain what's going on.

Thank you for the reply. That is actually what I was thinking. I will call the bank this week and clear things up.

'Cause he's young and he's got a well paying job right off the bat. Are you an engineer, by any chance OP? I see it a lot. Our head honchos drive old pickups and old Accords and the 20 something engineers drive BMWs and Mercedes Benz.

But for 16K, it's probably like a Honda Civic or something. If that's what you have and this is your situation, run it as long as it'll go.

Yes, you are right, I am an engineer. It's only a Subaru Impreza WRX but that is one of my affordable dream car (ofcourse, technically, dream cars are like lambor, ferrari etc). I put $8500 down And I will use it until it dies hopefully 5-10 years, and I will try to pay it off asap.

[John213]

Wow. I called and talked to Chase and I'm not wrong. The APR decreased and there will be no prepayment penalty. That was interesting. I don't know what happened, The Chase said they just adjusted the APR based on my credit score. I don't know why they did it, how they did it. But I like it. Any experience like this?

[snafu]

Terrific result from your phone call to Chase Bank. Will you kick up your payments from $ 335. as contracted to around $ 460. per month to accelerate pay-off? What is their procedure to make any extra or double up payment go directly to principle? Do you plan to make your 1st payment March?

[John213]

Terrific result from your phone call to Chase Bank. Will you kick up your payments from $ 335. as contracted to around $ 460. per month to accelerate pay-off? What is their procedure to make any extra or double up payment go directly to principle? Do you plan to make your 1st payment March?

First payment will be March 21st. The monthly payment reduced to $314 due to decrease to APR. I can pay extra anytime online (and just click "to principal) and I can pay more than $314 per month. I'm planning to pay off the loan as soon as possible.