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## Help calculating loan...

Valued Contributor

## Help calculating loan...

My sister is in the market to buy a '12 Honda Accord. The car is priced at 22950 msrp, dealer price 24417 (add ons). I'm working on negotiating that price.

Question is...they quoted us a payment of 550 a month, i believe at 72 months. What would be the interest rate on this loan to come out at 550?

she has a trade in, 2006 chrysler 300 touring 108k miles. they valued trade in at 6000-6500. I'm trying to get them at 7800...edmunds price.

I factored in the negative equity. I used edmunds calculator. I came up with a 7.9 interest rate, with tax, title, neg equity,and everything included. \

Can someone help me out here?

I'm not a kid anymore, I've done a lot of growing up!
Starting Scores Sept '15- EQ-555, TU-542-EX-536
Current Scores as of June '16 - EQ-592, TU-635. EX-629
Gardening since June2016
Message 1 of 13
12 REPLIES
Moderator Emeritus

## Re: Help calculating loan...

There may be some missing info...

Assuming they quoted you \$550/mo at 72 months, then the interest rate of the loan would be about 17.50% for a total loan amount of \$24,417. Total interest paid is over \$15k.

Now the above is calculated of a total loan amount of \$24,417. There might be tax and registration coming into play here. Also, the trade in might or might not come into play too. Certainly if the \$24,417 is less due to the trade in, then the interest rate would be much, much higher in order to maintain the \$550/mo at 72 mo. If the loan amount is greater than the \$24,417 due to the negative equity, then the interest rate would be much, much lower because the \$550/mo at 72 mo. is an assumed contant.

If you came up with 7.9%, then the loan value would have to be \$31,455 factoring in the trade in to equal \$550/mo at 72 months. Total interest paid is \$8,143 making the total cost of the Honda at \$39,600. Seems a bit pricey.

Message 2 of 13
Valued Contributor

## Re: Help calculating loan...

Thanks for the response...

Here are some clarifications

this is with 500 down, and i actually had an interest of 9.5.

Also i used a trade value of 6500, she owes around 12k on her Chrysler. I'm going to call monday to get the exact figures and post back here once i receive the info. Just dont want to be taken advantage of.

Also these numbers are with a cosigner, before the payment was at 639, and 550 after cosigner added. We are trying to get payment under 500 a month.

I'm not a kid anymore, I've done a lot of growing up!
Starting Scores Sept '15- EQ-555, TU-542-EX-536
Current Scores as of June '16 - EQ-592, TU-635. EX-629
Gardening since June2016
Message 3 of 13
Moderator Emeritus

## Re: Help calculating loan...

I'm butchering the numbers now...

Working backwards, she has a guesstimate negative equity of roughly \$5,500. She'll put down \$500 cash, so that's a net negative equity rolled into the loan of \$5,000. The new car's value is \$24,417 as a guesstimate. That's \$29,417 for the loan amount, at least. This would exclude taxes, tags, title, fees, etc.

The org. payment figure quoted was \$639 per mo w/out a cosigner for a 72-month term, I'm supposing. Using Bankrate's calc, the loan amount using the minimum \$29,417 comes to an interest rate of 16.1% to equal the \$639/mo for 72 months. Total interest paid is \$16,643 bring the total cost of the Honda to \$46,060.

If you factor in the cosigner and using the same minimum at \$29,417, and using the same 72-month term at \$550/mo, then the interest rate would be 10.35%. The total interest paid would be \$10,196 bring the total cost of the car to \$39,613.

Any way you slice it, the minimum loan amount would be \$29,417 factoring in a negative equity of \$5500 and a down payment of \$500. You'd have to get a higher trade-in value for the Chrysler, pay more as a down payment, and get the price lowered on the new car to get a monthly payment below \$500/month. Then there's still fees to be added. She would have to get the interest rate below 7% in order to get it under \$500/mo.

ETA...And I know we're guessing here. Anything can change with these figures.

Message 4 of 13
Valued Contributor

## Re: Help calculating loan...

Awesome, llecs, thanks for helping me understand this more!

I'm not a kid anymore, I've done a lot of growing up!
Starting Scores Sept '15- EQ-555, TU-542-EX-536
Current Scores as of June '16 - EQ-592, TU-635. EX-629
Gardening since June2016
Message 5 of 13
Valued Contributor

## Re: Help calculating loan...

yeah llecs is awesome i got help from him figuring out my loan. anyways dont make the same mistake i did where i had to have this car and told them i wasnt taking it unless my payments were 450.00 or lower. cause they will find a way to do it and yes you will be stuck with the car for 72 months cause you will be so upside down on it its not funny and will be next to impossible to refinance cause the loan of the vehicle will be so much greater than the car is worth

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Message 6 of 13
Frequent Contributor

## Re: Help calculating loan...

Put as much money down as you possibly can.  Even if you have to wait another month or two for the car.  72 month loans.... STAY away.......    Paying \$550.00 a month for 72 months on an Accord?  PRICELESS.

Starting Score: 521 TU, 597 EQ, 574 EX on 6/20/2011
Current Score: 753 TU, 764 EQ, 766 EX on 02/17/2014
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Message 7 of 13
Valued Contributor

## Re: Help calculating loan...

Update...

My sister ended up going with a 2012 Chevy Cruze LS. She was approved through Wells Fargo for 14%, payments 424 a month. She loves the car. Thanks for your help.

I'm not a kid anymore, I've done a lot of growing up!
Starting Scores Sept '15- EQ-555, TU-542-EX-536
Current Scores as of June '16 - EQ-592, TU-635. EX-629
Gardening since June2016
Message 8 of 13
Super Contributor

## Re: Help calculating loan...

Schoolbuskid wrote:

Update...

My sister ended up going with a 2012 Chevy Cruze LS. She was approved through Wells Fargo for 14%, payments 424 a month. She loves the car. Thanks for your help.

Glad that she likes it ~ did she go with 6 year financing ?   If so then the amount financed would be ~20,500.   Did she end up doing a trade in as well ?

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 9 of 13
Frequent Contributor

## Re: Help calculating loan...

IMHO she should have kept her vehicle until she paid it off. 424 x 72 = \$30,528 plus any cash down she put. She will pay that much for a \$17,500 car.. I don't think it was worth it.

She should make an extra payment a year so it gets cut down to 63 months, she will pay overall less interest if she does.

Message 10 of 13