Car Finance

[Pete91]

Hi everyone. Im Pete, and Im from Australia- this looks like an American site but nonetheless looks good.
The History:-

I have one default(paid now) from 2 years ago on my credit report from a bank for overdrawn account i didn't manage properly.

Quick question Im looking at financing a car from a dealer.
The car is $15,000. The loan is secured.

Now the dealer says he can get me finance no worries. I gave him my details and he came back with the "all you need to do is sign" approach.

All he can tell me "until we book the car to the loan company" is I would pay $111.50 a week over 60 months. Now from what I can work out thats dodgy as hell even with the "$700" application fee added

So looking at $479.45 per month (4.3 weeks average month??) So a GRAND TOTAL OF $28,767 would be paid back at the end of the term!

Now i've never taken a loan, but this seems drastic!

Is there any way to calculate what Interest rate that would be without seeing the legals?

Thanks in advance.

[disneysteve]

Welcome. I'll leave it to someone else to run the numbers but it really doesn't matter. You can't afford this car. I realize you are in Australia but money is money. If you need to take a 5-year loan, you are overextending yourself. You haven't told us how much you earn, but I don't really think it matters.

I do find it odd that they didn't tell you the interest rate because they certainly would have to here in the US but things may work differently there.

[disneysteve]

ETA: Your numbers work out to a rate of greater than 25%.

[Pete91]

ETA: Your numbers work out to a rate of greater than 25%.

Thanks for the reply mate.
G reater then 25%!!!!!!!!!!! The dealer and I supposedly "spoke frankly" today and he said its just above current personal loan interest rates in australia at the moment which is 15-18%............so I guess this guy and I should cease contact!!!!

How did you come to those figures disneysteve?

[bjl584]

Hi everyone. Im Pete, and Im from Australia- this looks like an American site but nonetheless looks good.
The History:-

I have one default(paid now) from 2 years ago on my credit report from a bank for overdrawn account i didn't manage properly.

Quick question Im looking at financing a car from a dealer.
The car is $15,000. The loan is secured.

Now the dealer says he can get me finance no worries. I gave him my details and he came back with the "all you need to do is sign" approach.

All he can tell me "until we book the car to the loan company" is I would pay $111.50 a week over 60 months. Now from what I can work out thats dodgy as hell even with the "$700" application fee added

So looking at $479.45 per month (4.3 weeks average month??) So a GRAND TOTAL OF $28,767 would be paid back at the end of the term!

Now i've never taken a loan, but this seems drastic!

Is there any way to calculate what Interest rate that would be without seeing the legals?

Thanks in advance.

So you are going to buy a car for $15,000 and pay back a total of $28,767? Am I missing something? That's a huge amount of interest. Close to 100%. If this is true, then run as fast as you can from this dealership. Find another place to do business with. It sounds like you need to think about spending less on a car. Maybe something in the $5000 to $8000 range would be more inline with your financial situation.

[disneysteve]

How did you come to those figures disneysteve?

I used an auto loan calculator at bankrate.com and kept plugging in a higher and higher rate until the monthly payment on a 15K loan approached the $479 figure you gave. The calculator only allowed a rate of 25% maximum which still didn't quite get to $479/month so your rate would be even higher than that.

Stay away. Don't buy that car and certainly don't borrow from that lender.

[bjl584]

I used an auto loan calculator at bankrate.com and kept plugging in a higher and higher rate until the monthly payment on a 15K loan approached the $479 figure you gave. The calculator only allowed a rate of 25% maximum which still didn't quite get to $479/month so your rate would be even higher than that.

Stay away. Don't buy that car and certainly don't borrow from that lender.

Well, 28,767 paid back on a 15,000 loan would be 13,767 in interest. That's huge. 91.8% huge. Run OP.

[riverwed070707]

Well, 28,767 paid back on a 15,000 loan would be 13,767 in interest. That's huge. 91.8% huge. Run OP.

It is most definitely a large interest rate, but it's not 91%... it's somewhere very close to 29%.

[disneysteve]

Well, 28,767 paid back on a 15,000 loan would be 13,767 in interest. That's huge. 91.8% huge. Run OP.

Brian, you can't calculate interest that way. Yes, the amount being repaid is 91% of the amount borrowed but that doesn't make the interest rate 91% (unless it was a 1-year loan). This is a 5-year loan.

[bjl584]

Brian, you can't calculate interest that way. Yes, the amount being repaid is 91% of the amount borrowed but that doesn't make the interest rate 91% (unless it was a 1-year loan). This is a 5-year loan.

That's still huge for a simple auto loan. I've never seen a auto loan figured that way. That's more like a mortgage. I thought auto loans were figured by simple interest? Either way, I wouldn't buy that car.

[nick__45]

Thanks for the reply mate.
G reater then 25%!!!!!!!!!!! The dealer and I supposedly "spoke frankly" today and he said its just above current personal loan interest rates in australia at the moment which is 15-18%............so I guess this guy and I should cease contact!!!!

How did you come to those figures disneysteve?

I think I should move to Australia and open a bank if I can get 10-15% return on my money just handling out insured/secured personal loans. It is funny how they can get that much for lending out money for can't spare more than 1% on money deposit.