I looked over my car loan of a vehicle I bought last March. The paperwork states that the amount to be financed is 39k after all fees and what not, yet I noticed my loan amount started at 46k. The interest is not included in the loan. When I make my car payment of 798. Some of that goes to principal and some to
I looked over my car loan of a vehicle I bought last March. The paperwork states that the amount to be financed is 39k after all fees and what not, yet I noticed my loan amount started at 46k. The interest is not included in the loan. When I make my car payment of 798. Some of that goes to principal and some to interest. I noticed something was up when my loan amount was still at 36k. What do I do?
What should you do? You should kick yourself hard for not paying attention to what you signed. I'll bet that $39k is the sale price you agreed on for the vehicle and that number does not include interest. The extra $7k is the interest you pay over the life of the loan. But go ahead and call the finance company to see if there was any mistake. In any event, you probably owe a lot more than the vehicle is now worth. What in hell were you thinking? Oh yeah, I forgot. 22 year old males don't think.
Banks usually charge you a fee to get a loan at all, and that fee is what you pay for first hand, only after that you pay into your loan and interest.
No, I don't find it fair. But, believe me, I'm not American, I live in Europe, and it's just the same way here.
If it's only about a car, you can sell it back to the bank (with a loss, of course) and buy a used one instead. If it's about a house and maybe a family, you're in trouble.
You financed $39,000, to include tax, title, and license. This is the principle amount, and will not include interest.
When you look at the total of your payments, this WILL include interest. This is why you have a total of $46,000. If you make every payment over the life of the loan, this is how much you'll pay.
When you look up a loan payoff with the bank, they will typically give you a 10-day payoff, which is the principle amount owed, plus 10 days of interest (remember that interest is accrued daily). The majority of your interest is paid during the first few years of your loan. Out of the $798 you pay monthly, you have around 23% going towards principle, which is about average. This is why you still owe $36,000 on the principle of the loan.
Hope this helps.
Did you buy from a Buy Here, Pay Here dealership? Without looking at your financial arrangements, I can only guess. I presume since March, you've paid $798 each month, on time, every time and your balance is correct at $36k (and not still at $39k or $46k).
In the early months of the loan, a large %age of your payment goes toward interest because of the larger balance owed (you're still "using" that money). As the payments progress, less and less of your payment goes toward interest and more and more goes toward the balance owed.
Ask for a complete audit of your payments. If your balance is still at $46k, then your payments haven't been credited to your account but to someone else's and maybe, just maybe your car is about to be repossessed.
Why have you waited 8 months BEFORE checking the amount of the loan you took out? You should have checked that figure before you signed. Then asked questions THEN if it was more than you had been quoted.
For the first couple of years you are going to be paying off far more interest than principle, that's the nature of a loan. To be down to 36k after just 8 months is pretty good going.
Did you trade in a car that you had a loan on before? If so you may have been that upside down in the old car. Dealerships do this all the time.. say you owe 20k on a car and they will buy it for trade say 5k well 5k is left on the loan so that amount gets rolled into the new car loan..
Contact the lender and send them copies of your paperwork. You may end up needing to take them to court.
Read the full contract and if it's not clear enough, call the lending institution and ask them.