What is your interest rate?

You’re getting closer…. Every time you make a payment you owe less, so that 6% APR is applied to a smaller amount.

 

I understand what the total interest cost is I'm just trying to figure out what the equation is to get it instead of just putting it into a car loan calculator.

 

Part of the issue is this is something that should he covered in school. Checking account management, debt management and just other life skills other than some of the items they’re teaching our youth. Trying to avoid anything political just speaking this is a good life skill that’s been lost.

 

Every payment you make lowers your balance thus lowering the amount of interest owed on your account. If you owe $50k and make $1,000 payment you only owe interest on the $49,000 not the entire $50k anymore. You will pay the interest on the balance from the month before but your interest owed for the next month will be based on the lower balance.

 

Anyone considering paying that much more in interest is nuts. Why seriously why would you pay that? Do you "NEED" a new truck or vehicle?

 

Did your financial advisor also tell you that if you do not wreck your vehicle then you wasted 100% of the money you paid for gap insurance?

 

I agree 6% is a lot compared to what we have been use to. Historically speaking though these are still somewhat lower than previous rates. The 70s-90s saw rates in double digits pretty consistently. Depending on where the economy goes rates could continue to rise but hopefully they’ll begin to lower soon. A big part of the 6% rate is the average cost to buy a car has the loans paying much more in total interest. Thankfully I got my truck at 2.6% years ago.

 

Insurance is ALWAYS a waste if you don’t wreck your vehicle. It’s a gamble saying if I do wreck it, my loan will be paid off. Once you get your loan to a point where you owe less than what the vehicle is worth, cancel the gap insurance and get a pro rated refund.

 

Now we get to pay uninsured motorist insurance cause people are figuring that out..............er something

 

Exactly

 

Yeah, its nice to be able to basically pay someone else's insurance for them!!

 

Or under insured motorist. The state min isn’t enough for a lot of the vehicles driving around. In Washington State it’s 25,000/50,000/10,000. Medical bills rack up fast to $25,000 and right now $10,000 doesn’t go far for an auto repair in a collision.

 

What I want to say I'm not gonna say cause I don't want to catch a ban....but you know

 

In final form:


For continuous compounding (not what you have but can do in a few seconds in a hurry to get an idea) you can use
Pe^(rt)
which is easier to remember on the fly, where e is the number e (2.718)
https://www.purplemath.com/modules/expoprob2.htm

 

I understand how it works. anything over 3 % is ridiculous. I paid cash for my Tacoma in 2011, my wifes rav 4 ( 2018) we paid 0.9% new. Even our house in the city we just paid off was 3.5%. % any higher is predatory in my eyes. However if you "NEED" a vehicle then you have no choice.
On another note, when banks and lenders have a lot of cash and no takers they will start offering incentives. Giving people money is how they make theirs.

 

Then (A times n) = the total you pay over the life of the loan. And that value minus P is the amount paid in addition to the initial amount borrowed.

 

You need to refinance right now.

 

So you're here to troll?

 

I remember my grandfather would always pay cash for a new truck. Every two years he would walk into the dealer offer 5-10% less than the sticker and most always walk out. That changed in the 90's when they started offering loans at 1.9, .9 and sometimes even 0%. Then we walked in one day and he was like, great. I will finance it all. I remember leaving and was like "is everything okay?" That is when he gave me a lesson on how much he would make on that money if he put it in a short term IRA or invested it somewhere opposed to handing it to the dealer.

When I purchased the 2018 Tahoe. I paid $12k down and financed the remainder. GM was offering 2.9 I think but gave you a $5,000 rebate to use GMAC. I had a loan through USAA approved for 1.9 and if you do automatic deductions they knock that down another .5 taking it to 1.4%. I walked out of the dealer financed with GMAC, took the rebate and 10 days later paid that loan off with no penalty with my USAA loan.