Any Auto Financing Gurus on here? Does this deal seem right?

[mongoose71]

First off, forgive my ignorance because I haven't bought many new vehicles.

 

I recently purchaced a 2014 from a dealer that a lot of my friends use and seems to have a good reputation.

 

After I agreed to the deal, I was busy with making sure they got the leveling kit and larger tires put on and working with my Insurance company. Today I got the paper work in the mail. And yes, I did sign everything without reading every single line. But now I'm questioning a few things. Maybe this is common, I don't know.

 

I will round some of the numbers off to make it easier. I agreed on $46,308 and wrote a $10K check. The finance guy told me I was getting 2.25% on the balance through ALLY. I told him that was good but I would be paying it off early. I hate financing things.

 

My paper work has the following:

 

Annual % rate Finance Chg Amt Financed Total of pmts Total sale pr

2.25 $2158 $36,308 $38,459 $11,750

$50,209

 

 

60 pmts at $641

 

The $11,750 is the GM Rebate and my Down pmt of 10K

 

I pay sales tax in my state and the Total taxable amt is $48057.72

 

 

Two things bother me here... I like to pay things off early to kill interest, but it looks like my interest is paid up front.

 

And why am I going to pay sales tax on $48K and not $46K

 

 

I should have slooowed down that day and asked more questions.

[EaZ8]

you need to see if you have a open ended loan or a closed loan.

if its open you only pay interest based on how long you actually hold the loan vs closed being if you pay it off early you still pay the same in interest as if you held the loan the full period. some closed loans even have a penalty fee if you try to pay it off early or "consolidate" it with something else.

 

i made sure mine was open, i havent even picked my truck up yet (wednesday i think its ready) but i plan to have her paid off in 2 yrs even though i stretched it over 6 on paper just for those months with birthdays and holidays so i have a lower required payment.

[Mike-1000]

Not sure what's up with the taxes .....you just need to ask. On the finance charge, they may be showing you what the financing costs if you make all the payments as scheduled. They are probably required to give you that info. Again, you need to ask or you may have paperwork from ALLY that explains the loan requirements.

 

Mike

[CL8N]

That's how most loans work if you look at them on an amortization chart. The majority of your payments, initially, go towards interest. They get their money first. It's typical for them to show you the finance charges also. This just shows what you would pay in finance charges if you were to pay on the truck for the life of the loan. If you're interested in paying extra payments to pay it off faster, maker sure that you specify you want the payments to go towards principle only. Otherwise, any extra payments could end up going to the interest of the loan instead.

[nibael]

_{All loans now are simple interest. Your interest is calculated daily based on the balance. If you pay more it goes towards the balance. No penalty for early payoff.}

 

_{The taxable amount is higher because you have to add the incentives or rebates, tax them and then take them off the bottom line.}