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
My contributions back to myfico forums:
The CSP-Freedom-Chase Checking Trifecta decoded:
http://ficoforums.myfico.com/t5/Credit-Cards/CSP-Freedom-Checking-Use-wisely/td-p/1355519
How to buy a car (First time car buyers)
http://ficoforums.myfico.com/t5/Auto-Loans/How-to-buy-a-car-for-the-first-time-buyer/td-p/1923289
