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Established Member
MSpurple
Posts: 20
Registered: ‎01-27-2013

Roadloans = Confusion

Hello everyone! After a week of lurking, finally decided to create an account :smileyhappy:

Im 21, and im searching for my 2nd car, but this would be my first time having it purchased and financed in my name. Out of highschool i screwed my credit score up, so I am resulting to anything, even if that means applying to roadloans. I was approved for up to $23,234 with an APR of 16% for 72 months, although I plan to pay off in 48 or less .. My parents hate it but I have to bite the bullet somewhere for my credit to be back in good standing. Im looking at a 2009 scion TC with a 11,995 sticker price, and a 2008 scion TC for $9,885 as choice number 2. Now, to the question... I've read the documents that they've provided, and it states :

 

APR : 16%

FINANCE CHARGE: $13,053.46

AMOUNT FINANCED: $23,234.54

TOTAL OF PAYMENTS:$36,288

           

           NUMBER OF PAYMENTS                                                 AMOUNT OF PAYMENTS                                                 WHEN PAYMENTS ARE DUE

                           72                                                                                   $504                                                         Monthly, beginning 30 days from the date of funding until paid in full

 

 

 

I understand that the finance charge + the amount financed = Total of payments. What i dont understand is why the amount financed is $23,235.54 if I only need $13,053.46 for the car?!? Is this something that I have to work out with the customer service [tried calling they're closed]. There is no way that's accumulated interest... i'm very new and unexperienced to this so please be patient with me :smileyembarrassed: Thank you in advance !!!

 

 

Starting Score:EXP:523 EQ:574 TU:594 {[09/13]}
Current Score:EXP:563 TU:597:smileyhappy: {[10/13]}
Goal Score:700
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Moderator
Revelate
Posts: 8,313
Registered: ‎12-30-2011

Re: Roadloans = Confusion

[ Edited ]

MSpurple wrote:

Hello everyone! After a week of lurking, finally decided to create an account :smileyhappy:

Im 21, and im searching for my 2nd car, but this would be my first time having it purchased and financed in my name. Out of highschool i screwed my credit score up, so I am resulting to anything, even if that means applying to roadloans. I was approved for up to $23,234 with an APR of 16% for 72 months, although I plan to pay off in 48 or less .. My parents hate it but I have to bite the bullet somewhere for my credit to be back in good standing. Im looking at a 2009 scion TC with a 11,995 sticker price, and a 2008 scion TC for $9,885 as choice number 2. Now, to the question... I've read the documents that they've provided, and it states :

 

APR : 16%

FINANCE CHARGE: $13,053.46

AMOUNT FINANCED: $23,234.54

TOTAL OF PAYMENTS:$36,288

           

           NUMBER OF PAYMENTS                                                 AMOUNT OF PAYMENTS                                                 WHEN PAYMENTS ARE DUE

                           72                                                                                   $504                                                         Monthly, beginning 30 days from the date of funding until paid in full

 

 

 

I understand that the finance charge + the amount financed = Total of payments. What i dont understand is why the amount financed is $23,235.54 if I only need $13,053.46 for the car?!? Is this something that I have to work out with the customer service [tried calling they're closed]. There is no way that's accumulated interest... i'm very new and unexperienced to this so please be patient with me :smileyembarrassed: Thank you in advance !!!

 

 


Welcome to the forums!

 

When I applied through Roadloans, it didn't matter how much I was purchasing the car for on their initial pre-approval or how much I was even asking for... was a basic calculation of how much I had for a downpayment, with my credit score, and here's the offer.  I haven't done the math explicitly on yours, but in this case the "amount financed" number is your loan value, which would actually be what you paid.  The finance charge is the interest paid over the course of the loan assuming no prepayment.

 

So for you, on the assumption the 12K was the out the door price (it'll be higher on that one car but for simple math) at 16% and 72 months, your numbers (assuming my math isn't off) are more like 260/month.  Finance charge in this case would be on the order of $6750 and the amount financed would be the 12K you paid for the car in this example.

 

I didn't go through Roadloans eventually (dealer beat them), but it should work like that.  FWIW, if your parents hate the idea of a 16% APR loan, could ask them to cosign, but I'd still let the dealership see if they can beat the roadloans offer.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 679, EQ 8 708, TU 711, EX 702* (07/14/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007

Re: Roadloans = Confusion

http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx

 

I cheated with the above calculator and Roadloan's calcs added up. Ditto to Revelate. They are saying the purchase is up to an approved amount of  $23k and the interest at $13k at that amount. Makes sense at 16% w/ a long term like that.

 

 

Established Member
MSpurple
Posts: 20
Registered: ‎01-27-2013

Re: Roadloans = Confusion

@Revelate THANK YOU! Well this is certainly out of the question, im only looking to pay no more than $20,000 within the next 3 to 4 years. My parents don't want to cosign because they have too many things in their names already, and they just down right want me to do EVERYTHING for myself now that im getting older :/ ...

Starting Score:EXP:523 EQ:574 TU:594 {[09/13]}
Current Score:EXP:563 TU:597:smileyhappy: {[10/13]}
Goal Score:700
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Established Member
MSpurple
Posts: 20
Registered: ‎01-27-2013

Re: Roadloans = Confusion

I see, so this means that if i don't buy a car under 23k then im still paying for a car worth 23k PLUS interest. The interest is more than the car!!! I can't take that route.

Starting Score:EXP:523 EQ:574 TU:594 {[09/13]}
Current Score:EXP:563 TU:597:smileyhappy: {[10/13]}
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Moderator
Revelate
Posts: 8,313
Registered: ‎12-30-2011

Re: Roadloans = Confusion


MSpurple wrote:

I see, so this means that if i don't buy a car under 23k then im still paying for a car worth 23k PLUS interest. The interest is more than the car!!! I can't take that route.


Nah, you're approved up to that amount; that doesn't mean you have to spend all of it :smileyhappy:.

 

Figure out your purchase price, then use the link illecs helpfully provided at the 16% APR which Roadloans quoted you, and that's your loan math.

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 679, EQ 8 708, TU 711, EX 702* (07/14/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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Community Leader
Senior Contributor
StartingOver10
Posts: 3,792
Registered: ‎03-06-2010

Re: Roadloans = Confusion


MSpurple wrote:

I see, so this means that if i don't buy a car under 23k then im still paying for a car worth 23k PLUS interest. The interest is more than the car!!! I can't take that route.


Remember when you are buying a vehicle, buying anything that you have to finance really, it is really two transactions: 1) the actual cost of the purchase of the item (vehicle in this case) and 2) if you don't have cash, then you are "buying" money.  Interest is the cost to purchase the money you don't have to purchase the item.

So, when you have two transactions together like financing the purchase of a vehicle, you will want to check mulitple sources for the cost of the money (interest rate and terms) and check mulitple sources for the vehicle.

 

You are wise to keep the initial purchase price low. Next, shop the financing. A good place to shop the financing is a CU. Another good place is where you bank. If roadloans is the only place that will finance you, then when you go to the dealership, see if they can beat the rate and terms. If not, don't do the deal. Getting stuck in a high interest long term installment loan is really rough. Now, if you have to have a car, it is better than walking, but then you do a two step process like Revelate suggests in his posts- refinancing out of it as soon as you qualify.

 

Is there any way you can bump up your score before you buy? Check the rebuilding forum to see if there are any tips there for you. Also, remember, the interest rate is negotiable.

Established Member
MSpurple
Posts: 20
Registered: ‎01-27-2013

Re: Roadloans = Confusion

@startingover10 ok makes sense... I just thought that the amount financed should be the actual amount of the car, not what was approved.. Plus interest.

I actually did just realize that I could bump my score up. I have $11k in school loans and $1k CC balances. I have 9 accounts and 6 are in bad standing [4 of are late payments, other 2 reported to collections but paid off and closed] I made sure that my school loan payment were always on time... So I guess that's the plus side. I don't have much debt, but i only make about 30k a year. My car is going to cloak any day now...I may have a month or two left the most [battery/muffler problems, leaking coolant and wiper fluid, ABS brake light is on, engine light is on... Has about 151k miles] it's a salvaged car and she's lasted me 4 years now. Do you think 2 months is enough time to build my credit if I can pay off my revolving debt and work on my installment loans?
Starting Score:EXP:523 EQ:574 TU:594 {[09/13]}
Current Score:EXP:563 TU:597:smileyhappy: {[10/13]}
Goal Score:700
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Established Member
MSpurple
Posts: 20
Registered: ‎01-27-2013

Re: Roadloans = Confusion

I forgot roadloans pulled my scores a few days ago they've gotten 566 from EQ ... And I've had it pulled today from this website and got 529 from EQ.
Starting Score:EXP:523 EQ:574 TU:594 {[09/13]}
Current Score:EXP:563 TU:597:smileyhappy: {[10/13]}
Goal Score:700
Take the myFICO Fitness Challenge
Moderator
Revelate
Posts: 8,313
Registered: ‎12-30-2011

Re: Roadloans = Confusion


MSpurple wrote:
I forgot roadloans pulled my scores a few days ago they've gotten 566 from EQ ... And I've had it pulled today from this website and got 529 from EQ.

There are many versions of FICO scores available (an absurd number in my opinion but that's irrelevant sadly); the EQ found here is specifically EQ Beacon 5.0, which is FICO '04 and identically equal to the one you'll get on a mortgage application.

 

There's both a newer version of the FICO algorithm (FICO '08) and also what's called an Auto-Enhanced score which weights things differently.  See the sticky at the top of the forum, but for auto loans especially people's scores will likely be different than what we have access to as the auto-enhanced score is used extremely often.

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 679, EQ 8 708, TU 711, EX 702* (07/14/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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