$2060.77 finance charge?

Navy Federal CU has better rates. Like 5%.

 

$2k "finance" charge.....yoooowwwzaaaaaaa

 

you don't know the half of it. I've tried to talk people out of 30k finance charges on cars, and failed.

Specifically a G37 I once sold to a couple who refused to look for something newer and cheaper to get that rate down.

Goes back to my prior post though, sometimes you just can't talk people out of things, it's why I don't ever want to be in car sales again.

 

10% interest rate isn't getting screwed over? Jeebus...my truck which is only a couple years old and I bought used has an interest rate of 2.8%, with good credit though. I would imagine bad rates are in the 6-8% range, and double digits are for the buy here pay here "we'll be repo'ing this car" places.
I'd imagine it would be awful trying to sell people cars these days, those salesguys probably hate me because they try to sell me on a car and tell me all this stuff about it that I already know. When - as so often it does - it turns out that the car they had was junk, they either start trying to sell me on some other car that's not what I'm looking for but they think "similar enough" or start saying "what if we could work on the price?" I've learned to just say I don't like a car flat out, for any price to get them to stop. After I had the sales manager try to close the deal on some POS GTO repeating "I can't force you to buy it, but I can offer you a great deal" about 10 different times. He probably would've liked to force me to buy it...in hindsight, I should've just walked away and got in my car when he didn't get a clue but I'm too nice...

 

$2k finance charge is like 22% more on top of the 10% rate.
If someone offered me these terms I would keep looking.

 

I sold cars for many years, we called them "payment" buyers..

The car cost, interest rate, etc be-damned..long as the downstroke and monthly payment was right we had a deal..

I'm paying a ton of interest on my own loan as well..my credit was less than sterling (fair)when I purchased 12 mos ago..I put my 3K down payment on a credit card..I wanted nothing out of pocket to speak of..at that point I was a payment buyer myself. I paid the CC off with sale of my previous worn out C5..(put the rest in the bank)

Now I'm driving my dream car, and so far I'm making the nut every month without any undue stress. I bought low miles and have only had one small repair in that time. (radiator replaced)

I notice after a year of perfect payments made that my credit score has jumped considerably..(now excellent)

 

Aw, DAAYumm. Johnny92, you made the decision with your heart and not your head. Do you understand that they charged you 18% on the money they loaned you? Find that number in the example I cite below in the "Payment Breakdown".




No joke; that's what you're being charged. The loan tables that are outlined by lenders for borrowers are dictated by Federal standards; the standards are set by politicians and lobbyists who are both lining their pockets by deceiving the public. The "interest rate" is claimed to be "10%", a. k. a. in this case, cited as 'compound interest' (no matter the compounding schedule--be it daily, monthly or yearly). That declared number is prolly the smallest number they can legally cite; it's in the lenders' interests to grift the borrower and hide the actual ratio between the loan and the interest rate. In your case, they're charging 18%, a. k. a., "10% compounded interest". You see how much more appealing "10" sounds than "18"? Do you understand how high that '10%' is, in today's market?? The average credit union CD rate of return is ~.6% (POINT 6%). That is to say, an annual CD will only yield .6% interest for a year's investment--another way to look at this is, you're being charged 16.6 TIMES more for your loan than they could make on a sound 'public' yearly investment. In this market, for most borrowers with decent credit a USED-auto loan probably hovers at 4% compounded. I got mine at 2.99% last year... you're gettin' S-C-R-E-W-E-D with a 100-pt-font capital "S".

But you might as well enjoy it--to get out from under by selling the car would probably cost you as much as the loan because the depreciation you absorbed driving it from its' previous owner probably hovers ~15-18%; You've made a bad financial decision that will affect the next 4-6 years (the rest of your life, actually, if the stark truth be told). It's not the end of the world, but read up on financial articles and learn from your splurge. Figure out how much the opportunity cost for this car has changed your financial picture for the next 5 - 10 - 20 years. Those numbers are easily calculable with inflation and compound interest retirement calculators. It's a big error, but you're so young you have ~20 years to recover... that's not a long time, especially when one is 48 years old wondering, "where'd the last 20 years go?" and "I'm halfway to retirement age". Keep saving; $500/month should just be the start. It's barely enough to qualify as a valid retirement budget. Good luck.

 

So was the finance charge interest?
As far as I'm concerned everything the lender charges should be considered interest.

 

I do not care what some are saying YOU DID NOT GET SCREWED on the loan. About the best someone with even spotless credit is going to get is 5.5% on a 15 year old car. Your credit at 600 is far from spotless. 10% is not a horrible rate for you at all in fact I would say it is actually good.

 

As a CPA, I have to agree with the others here. This was a poor financial decision. Make sure you're saving for 6 month+ emergency fund, retirement, down payment on a house, etc. before you start buying expensive toys.

 

^I think the deal is done.
Veterans don't need a down payment for a house. But I agree with the emergency money and retirement.
I would save for a down payment on a rental property to build equity for retirement and let the tenants fund your retirement.

I have found the C5 to be reliable transportation but I do my own mechanical work. If you don't have mechanical skills then you will need some savings for that as well.

I don't think the payment is that bad if it is coming out of your hobby and entertainment money. At least you have something of value to show for it. I spent more than that on beer.

The part I disagree with is spending all your savings.

 

$2000 finance charge and 10% rate? He got screwed. He made a huge mistake and unless he gets a better job and starts making more money, he probably will regret buying this car. At 64 I have seen this scenario play out many times. Hopefully his parents are capable of bailing him out or at the very least letting him move into their basement.

 

I think there is a psychology behind how poor people stay poor. They seek instant gratification rather than planning ahead. It cost at least double to live that way.
It is not your income it is your outcome that will make you richer.

I was worse off financially than the OP at his age until I was forced to turn it around. Then I saved while driving a POS '96 Ford Explorer wile living in an efficiency apt that I helped remodel for a friend. I bought food in bulk and only drank cheep beer while I saved. I had to live that way for 10 years. Lesson learned!!! 10 years is a long time out of a persons life to play catch up financially.

luckily, I ended up finding a pre-forclosed home in an appreciating area. Then I bought the Vette as a hobby car.

When you go through what I did it makes you wish you would have listened to good advice early in life.

I don't think this car will brake you but you could have done better.

 

Shouldn't he brake the car, instead of the other way around?????




Shakey

 

IDK It's kind of a nice looking car really.

 

Its gonna depend on your definition of screwed I guess. I financed my C5 at under 3%, and paid a total of about $200 in interest due to paying it off way early. However, I didn't have bad credit.

To stay positive, I'm going to assume that "a little more than 12k" means at least 14k saved up. That would mean that he paid 10k out of pocket, and still has 4k in savings. That should be enough for a very conservative 6 months depending on how much he pays in rent. If it means, $12,XXX then we have a different story all together.

Now to be positive, this is a rebuilding credit experience. It's costing him $2000 to rebuild his credit by way of cool corvette. I'm not saying it was a good decision by any means, but it can still be positive for him especially if he's able to pay extra on the principal each month and cut down on how much interest he actually pays.

 

I'm guessing you are not a financial wizard.

 

We forgot about this: That means he had $12K in savings and $3600 debt. Net worth about $8K He is no where near ready to buy a $20K+ weekend toy. I don't see anything positive about it. Back in my youth I really never borrowed any money and never used credit cards. I really had no credit rating, but when I went to buy a home with 50% down payment the banks were fighting for my business.

 

The guy borrowed $9,500 @ 10% interest and his payment is $241 a month which comes out to a total finance charge of About $2,000. It is not 10% plus $2,000. Key 9500 for 4 years @10% into any loan calculator you will see about a 240 a month payment.

Getting screwed means paying significantly more than market rate for something. Even if a person has stellar credit on a 15 year old car they are going to pay 5-6% or a bit over $1,100 in total finance charges on $9,500.

If you think the guy got raped on the loan please tell me where you know of that a person with a 600 credit score wanting to buy 15 year old car and finance it for 4 years can get better than a 10% interest rate.Yes the rate would be lower on a newer car and if his credit was spotless it would also be lower but that is not what we are talking about.

Also whether or not depleting a large portion of his savings to buying the car in the first place was a wise decision is another topic entirely.

I am just saying given the age of the car, how long he wanted to finance it for, and the guys credit score the terms of his loan are not bad in fact actually pretty good.

 

OK. I misunderstood. I thought the 2 grand was a fee to get the loan.

Even though. The kid is buying something he can't afford and it will probably lead to a pattern the rest of his life. He will be like some of my co-workers that will have to work the rest of their lives while I made the same income, always had everything I wanted and retired at 57.