Reply
New Member
david122
Posts: 12
Registered: ‎01-28-2013

Help~ Auto loan rate question

Hi I am purchasing a car and getting a load from TD bank. They are offering me 3.9% rate for 72 months, the car costs $36596 after tax and everything. And my monthly payment will be $575. How is this right? I mean... If I take $36596 /72 months = $508.28 (before 3.9% interest). And then 3.9% of $508.28 is $19.82. So the monthly payment should add up to $528.10, how come the dealer is telling me I have to pay $575 a month? Thanks!!

Established Contributor
SamsungHDTV
Posts: 517
Registered: ‎10-25-2011

Re: Help~ Auto loan rate question

[ Edited ]

david122 wrote:

Hi I am purchasing a car and getting a load from TD bank. They are offering me 3.9% rate for 72 months, the car costs $36596 after tax and everything. And my monthly payment will be $575. How is this right? I mean... If I take $36596 /72 months = $508.28 (before 3.9% interest). And then 3.9% of $508.28 is $19.82. So the monthly payment should add up to $528.10, how come the dealer is telling me I have to pay $575 a month? Thanks!!


The calculations you are doing is for simple interest. Your loan is most likely compounded interest, and monthly. You should ask your dealer how often the interest in compounded. Or more simply, use an auto loan calculator. I like Chase auto loan calculator. It was almost on the money give or take $1. 

 

I plugged in your numbers and it says your payment should be about $571, which is very close to the dealer's figure. Make sure the dealer didn't add anything extra like GAP insurance or extended warranties. 

 

Also, I think you should shop a credit union's rate. Tell them you were approved for 3.9% at the dealership, ask them to beat. If they beat, ask your dealer to counteroffer.

 

Link for chase auto calculator: https://www.chase.com/auto-loans/payment-calculator

 

Hope this helps

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.
Valued Member
Sputney23
Posts: 44
Registered: ‎08-13-2012

Re: Help~ Auto loan rate question

Thanks for posting that calculator

EQ 700 Trans 695 Exp 722
Established Contributor
SamsungHDTV
Posts: 517
Registered: ‎10-25-2011

Re: Help~ Auto loan rate question


Sputney23 wrote:

Thanks for posting that calculator


no problem, its a very handy tool to estimate what your payments will look like. You can use it to see what type of rate you need to be approved for. Glad it helped.

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+