03-27-2013 11:29 AM
I just purchased a new car and received a 2.29% interest rate from the bank. My question, does the 2.29% really equate to that?
Loan Amt: 45573.76
Interest Rate: 2.29%
Terms 60 months
Bank says my pmt will be $805.35
My number crunching came up with $804.60 why is there a diifetrence? Anyone know ?
I used Excel to get my monthly payment of $804.60. The banks number is $805.35 which equates to around 2.33%
03-27-2013 11:39 AM
Are you compounding interest monthly or yearly, my guess is yearly
03-27-2013 11:53 AM
Ok im wayyy too lazy to break out the calculator but calculating it yearly will not accurately break down your interest paid. On a month to month basis if interest is charged at the yearly rate divided by the number of months charge that amount will be greater than the sum of the payments for the year times the interest for the entire yea.....i think. LOL
So basically because you make monthly payments instead of one BIG payment yearly you end up paying a fraction more in interest.
03-27-2013 11:55 AM
The 2.29 is the APR, APY which accounts for the amount of time interest is applied is more.
Look up APY vs APR in google for a much better explaination than I can give
03-27-2013 12:03 PM
It's definitely an APR of 2.29%. I've used every calculator tool for auto loans I could find and they all say 804.60 I used the banks calculator and it came out to 805 they don't show cents. So I called the bank and the loan officer could only say that monthly is $805.35 an my APR was 2.29%. She couldn't tell me how they got that number. I said that's a rate closer to 2.33%. She had no answers. This seems a bit strange to me. What can I do now?
03-27-2013 12:12 PM
Ok let me try again.
Yes the 2.29 is the APR. APR means that the standard yearly rate if you were to make ONE yearly payment you would pay 2.29% in interest. You pay monthly, not yearly. Therefore the APY (the real interest rate for your loan) is HIGHER.
03-27-2013 12:24 PM
No problem man, congratz on getting 2.29% !!!
03-27-2013 02:07 PM
I am getting the same 804.60 as you. Seems like your bank is milking an extra $1 out of you and hoping you won't notice.
If you make even $1000 payments. You will pay off your loan 1 year sooner and save about $550 in interest.
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