GM Financing - Early refinance

13nick13 · July 31, 2019

3 minutes ago, scdaren said:

Lol... are you really a finance manager? Or just a troll? Because I don't think you understand how interest works. We are not talking about the monthly payment, we are talking about the cost of interest.

You see, for each payment you make, a portion goes to the principal (the money you owe the bank) and a portion goes to the bank (the money you pay the bank for the privilege of borrowing money from them).

Over six months, at 6.99%, the portion of my payments that would have gone to the bank to keep, and not to pay down the loan, would have been $1943.62. On the 2.85% loan I got, that total interest paid over 6 payments will be $789.44.

Do you really not understand how the cost of interest works? If you are in truth a finance manager, that blows my mind.

talk all the smack you want. i'm sitting here in front of a computer program we pay 5,000 a month for that tells me the right answers. you can pound your chest all you want to cheif. ur trying to tell me you paid 1200 less in interest in 6 months and you are WRONG WRONG WRONG.

scdaren · July 31, 2019

3 minutes ago, 13nick13 said:

talk all the smack you want. i'm sitting here in front of a computer program we pay 5,000 a month for that tells me the right answers. you can pound your chest all you want to cheif. ur trying to tell me you paid 1200 less in interest in 6 months and you are WRONG WRONG WRONG.

Wow... this complete lack of understanding of loan amortization explains so much about why finance managers make me crazy with their nonsense.

Okay, close out whatever fancy dealership program you are using, and open up Microsoft Excel. Go to new spreadsheet, and in the "search for online templates" box type in "loan amortization schedule." You'll see a fancy little green and white template available under that name. Open it. Type in the numbers. Look at the column titled "Cumulative Interest" and see what that number says at month 6.

jwhjr · July 31, 2019

@scdaren My numbers agree with yours as far as interest paid over 6 months between the 2 rates to a tee. Not sure where the other numbers are coming from...

13nick13 · July 31, 2019

2 minutes ago, scdaren said:

Wow... this complete lack of understanding of loan amortization explains so much about why finance managers make me crazy with their nonsense.

Okay, close out whatever fancy dealership program you are using, and open up Microsoft Excel. Go to new spreadsheet, and in the "search for online templates" box type in "loan amortization schedule." You'll see a fancy little green and white template available under that name. Open it. Type in the numbers. Look at the column titled "Cumulative Interest" and see what that number says at month 6.

if you think you will SAVE 1200 in 6 months then you arent worth any more of my time because you clearly dont get it. Thats nice you know how to use excel. What i'm telling you is HOW IT IS AT THE DEALERSHIP. you go play on excel all you want. i'll go back to doing this math for a living and you can feel right. have a great day.

scdaren · July 31, 2019

2 minutes ago, 13nick13 said:

if you think you will SAVE 1200 in 6 months then you arent worth any more of my time because you clearly dont get it. Thats nice you know how to use excel. What i'm telling you is HOW IT IS AT THE DEALERSHIP. you go play on excel all you want. i'll go back to doing this math for a living and you can feel right. have a great day.

You are a finance manager, and you do not understand the difference between monthly payments, and the cost of interest on an amortized loan. OMG. I have no words.

I am not talking about monthly payments. I am talking about over the course of those 6 payments, the amount of INTEREST that the bank gets to keep versus the amount that you are paying down your loan. These are basic concepts. Not talking about how much more you would pay in monthly payments over 6 months, I'm talking about the $$$ in interest the bank gets to keep rather than paying down how much you still owe on the truck.

13nick13 · July 31, 2019

to be clear... this dude definitely paid more in interest than the example i gave but most people don't walk in and spend 65,000 on a truck and also there is no bank in michigan that offers 72 months at 2.85%. but to reiterate... HE DIDNT PAY 1200 LESS IN INTEREST OVER 6 MONTHS!

scdaren · July 31, 2019

19 minutes ago, 13nick13 said:

to be clear... this dude definitely paid more in interest than the example i gave but most people don't walk in and spend 65,000 on a truck and also there is no bank in michigan that offers 72 months at 2.85%. but to reiterate... HE DIDNT PAY 1200 LESS IN INTEREST OVER 6 MONTHS!

Lol, here is my CU where the rate has now dropped to 2.19%.

https://www.myeecu.org/home/loans-credit-cards/auto-rv-boat#vehiclerates

And here is the math:

Edited July 31, 2019 by scdaren

Daverado · July 31, 2019

41 minutes ago, scdaren said:

Lol, here is my CU where the rate has now dropped to 2.19%.

https://www.myeecu.org/home/loans-credit-cards/auto-rv-boat#vehiclerates

And here is the math:

A couple of other interesting things to see there in those numbers...

Paying $866/month vs. $975/mo you are "saving" $654 total over 6 months. But after 6 months your "ENDING BALANCE" is also $496 less. You own more of the vehicle after 6 months even though you paid less.

The difference in interest cost is the combination of those two factors, how much more you've paid and how much more you still have to pay for that 6 months. So $654 more in payments plus $496 additional in what you still owe gives you that same $1150 figure you get in the "CUMULATIVE INTEREST" difference.

If you sell the vehicle (or refinance), that $500 is in your pocket now.

I doubt finance managers are required to have a finance degree/certificate/whatever education or understand this stuff honestly. They have $5k software to do it for them after all lol. Most of the ones I've dealt with were just glorified salespeople there to sell rust, paint, and fabric protection and extended warranties after the other salespeople are done selling me the floormats.

Edited July 31, 2019 by Daverado

scdaren · July 31, 2019

4 minutes ago, Daverado said:

A couple of other interesting things to see there in those numbers...

Paying $866/month vs. $975/mo you are "saving" $654 total over 6 months. But after 6 months your "ENDING BALANCE" is also $496 less. You own more of the vehicle after 6 months even though you paid less.

The difference in interest cost is the combination of those two factors, how much more you've paid and how much more you still have to pay for that 6 months. So $654 more in payments plus $496 additional in what you still owe gives you that same $1150 figure you get in the "CUMULATIVE INTEREST" difference.

You aren't just paying less per month with the lower interest rate, you are also paying off the loan principle faster... you owe less. If you sell the vehicle (or refinance), that's $500 more in your pocket right there.

I doubt finance managers are required to have a finance degree/certificate/whatever education or understand this stuff honestly. They have $5k software to do it for them after all lol. Most of the ones I've dealt with were just glorified salespeople there to sell rust, paint, and fabric protection and extended warranties after the other salespeople are done selling me the floormats.

Makes so much sense now why every time I go to buy a car all they want to talk about is the monthly payment. When I start talking about total numbers I almost always get a deer-in-the-headlights look.

UGADawgs · July 31, 2019

2 hours ago, 13nick13 said:

Everything you buy in life is marked up. start yelling about the grocery store marking stuff up too. maybe it will change something there. Maybe whatever you do, they should stop marking up their services and just do everything at cost. would that make things better for you? or is that kinda how an economy and capitalism works?

There is a difference between being honest and deceptive/unethical/dishonorable. Capitalism still works for those with integrity.

KARNUT · July 31, 2019

Damn, poor guy comes on here trying to help out and bumps into financial wizards. I think his advice is well intentioned. I have real good credit. I pay very little interest for lots of reasons I wouldn’t get into here. I’m not going to finance twice. I get my deal on the front end. Add my payments to check their numbers and go on. The real savings is paying off your house early. Talk about rip off, that’s where the real money is.

Sent from my iPhone using Tapatalk

killramos · July 31, 2019

2 hours ago, scdaren said:

Lol, here is my CU where the rate has now dropped to 2.19%.

https://www.myeecu.org/home/loans-credit-cards/auto-rv-boat#vehiclerates

And here is the math:

This guy knows how math works. A+

Saved me from making my own spreadsheet to show haha.

Edited July 31, 2019 by killramos

Bob2C · July 31, 2019

Crickets

killramos · July 31, 2019

To be fair, I agree he was just trying to help and my intention is not to poke fun.

The shit can be complicated if you don’t have the right background, I knew people taking MBA’s who still didn’t understand how loan amortization worked.

Edited July 31, 2019 by killramos