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Discussion Starter #1
hi
i am finalizing a deal in NY on a 2006 mazda sports sedan sport

i am trying to understand more on the financing as i havent see the papers yet

i took the $1000 down with 8.9% interest-- i believe the loan is with Mazda American Credit
-questions:
1. i am told ny has rules where you cant prepay prior to 90 days - anyone know what thats about
2. does anyone know how much of the monthy payments is used to pay off interest and how is used to pay off principal


anyone have any hints on what to look for in the financing agreement

thanks
 

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Discussion Starter #3
Thanks for the formula -

Looking at your example ---how much of the375 is interest and how much is principal ---is the interest primarily paid off before the principal in the first 90 days or is it a combination
 

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The formula that I gave you is a rough guide of how much the interest is for the whole financing term (in that example, $1522.50). So just divide that by the number of months (60) to see how much interest you're paying per month.

Remember, this is a rough guide. If you want to be exact, you need a financial calculator. Also, if you want to be exact, the interest amount is not going to be the same from month to month. Just like mortgage, in the beginning of the financing term, you're paying more interest and less principal and that number will slowly flip.
 

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Loans often come with a prepayment penalty, and in this case it seems to be 90 days.

Most car loans are simple interest loans. That means you pay interest on the remaining balance each month. In your case, at 8.9% you would be paying 0.7417% interest monthly. Assuming the interest is applied monthly (which is not true - it's probably daily, but that's a more complicated calculation) if you borrowed $20,000 that means the first month's interest would be approximately $148. If you are paying $375, then the amount applied to the principal is $375-$148=$227. The second month, the interest would be calculated on the new principal amount ($20000-$227=$19773) and the interest would be slightly less. Toward the end of the loan the interest would be very small and the payment would be mostly principal.
(Similar calculations can be used if you want to figure it based on daily interest. But like I said - it's more complicated since that means you pay interest on the interest that is accrued each day and when you make your monthly payment the interest will be slightly higher than if it was compounded monthly...)
Look online for a loan amortization program and it can print out the exact interest/principal payments for each month for the life of the loan.
 

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Your best bet is to call whoever you got your loan through and ask them. We can go over all kinds of differnt ways interest can be applied, but we need to know the specifics of your loan. More than likely they will allow you to pay over any amount you want, but the way the money is applied will vary.
 

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If you are financing with MAC, you DON'T need to wait 3 months. I have been told the following by different dealers:

- You have to wait 3 months before refinancing
- You have to wait for your title before you refinance and it's just a coincidence that it takes the DMV 3 months to send you your title
- You can refinance MAC as soon as you have the title. Go to the DMV and have them expedite it. (this is the dealer I am going with)

So, I plan to refinance as soon as I have the title. See also this thread.
I'm in NY too - NY doesn't have rules with respect to refinancing. The thread I linked to mentions something about a $$ kickback to dealers if you wait 3 months. I wouldn't trust the dealer about refinancing MAC.
 

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They are probably trying to get you to wait 3 months so THEY get paid their headhunting fee from MAC. That was the turn around at the Honda stealership I worked for. If someone refinanced before that, they wouldn't get paid the fee, if it was over 90 days, they got the full fee from the credit company. (Note: most dealerships make alot of money here, more than the actual profit from the car in many cases.)
 

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Yeah...there is NO waiting period. I also called when I got my loan. It's just for dealer bonus. Even my saleman told me that if I paid it off immediately, he'd lose a bonus.
 

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Discussion Starter #10
hi
thanks for the information-the dealer keeps telling me that i would pay a set amount of interest - so they took the total amount of interest and divided by the term of the loan

so 3544/60 =60

they dont seem to understand that principal also needs to be reduced -

but they did confirm that it was a simple interest loan
 

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The dealer puts a "fixed" amount of what the amount will be if you pay it off in exactly 60 months. If you pay it all before interest accrues, there isn't interest to pay.
 

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Discussion Starter #12
- You can refinance MAC as soon as you have the title. Go to the DMV and have them expedite it. (this is the dealer I am going with)

So, I plan to refinance as soon as I have the title. See also this thread.
I'm in NY too - NY doesn't have rules with respect to refinancing.

so how can i get the title faster --
i plan to pay of the loan once i get the title

any other things i should be wary off when i go today
 

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so how can i get the title faster --
i plan to pay of the loan once i get the title[/b]
Well, I haven't done it yet, but I'm told my title gets processed right near me in Albany but then gets sent to a main mailing center in NY City and then back to me. I was told I can bring my VIN# to my local DMV and have them process it and hand the title to me.
 

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hi
thanks for the information-the dealer keeps telling me that i would pay a set amount of interest - so they took the total amount of interest and divided by the term of the loan

so 3544/60 =60

they dont seem to understand that principal also needs to be reduced -

but they did confirm that it was a simple interest loan[/b]
Simple interest is based off of the face amount for the life of the loan...
 

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anyone have any hints on what to look for in the financing agreement

Look for "no prepayment penalty". Mine clearly stated that, but the finance guy also told me that I could pay off right away, instead of lying to me. They did give me a ridiculous interest rate of 10.5% and I have very good credit rating (score near 800).

I paid mine off 3 weeks after purchasing, cost me about $60 in interest n a $10,000 loan (which they said was the minimum I had to finance to get the $1000). About a week after buying I was able to call MAC at number I found on their web site and get a payoff quote and the account number.
 
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