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Is 2.29% really 2.29%

Established Member

Is 2.29% really 2.29%

Hi all,

 

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%

 

 

 

Message 1 of 21
20 REPLIES
Regular Contributor

Re: Is 2.29% really 2.29%

Are you compounding interest monthly or yearly, my guess is yearly Smiley Wink

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly Smiley Tongue) //CK:692, Sesame:656
Message 2 of 21
Established Member

Re: Is 2.29% really 2.29%

Correct Yearly

Message 3 of 21
Regular Contributor

Re: Is 2.29% really 2.29%

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.

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly Smiley Tongue) //CK:692, Sesame:656
Message 4 of 21
Regular Contributor

Re: Is 2.29% really 2.29%

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 Smiley Very Happy

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly Smiley Tongue) //CK:692, Sesame:656
Message 5 of 21
Established Member

Re: Is 2.29% really 2.29%

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?

Message 6 of 21
Regular Contributor

Re: Is 2.29% really 2.29%

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.

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly Smiley Tongue) //CK:692, Sesame:656
Message 7 of 21
Established Member

Re: Is 2.29% really 2.29%

I understand better.  Thanks for clearing that up.  I'm reading more abotu it now.  Thank you

Message 8 of 21
Regular Contributor

Re: Is 2.29% really 2.29%

No problem man, congratz on getting 2.29% !!!

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly Smiley Tongue) //CK:692, Sesame:656
Message 9 of 21
Valued Contributor

Re: Is 2.29% really 2.29%

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.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k       $8.5K          Closed          $19k      $6.5k        $24.2k        Closed         $5k       Closed     $8.5k        Closed      @2.49%
Message 10 of 21