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Buried by Santander

Xihuitl
New Visitor

Buried by Santander

Wife and I were desperate for a car, as our truck was very close to dead (it died weeks after getting new car). The dealership set us up with a loan on a pretty gently used car for ~$12k, but the loan was with Santander. Didn't know anything about them, and was just glad we got approved at all. I know my credit score at the time should have prevented me at all, but I took the loan and now regret it. Here's why:

 

3/8 - Made minimum payment of $366.47, $121.84 applied to principal

4/19 - Made payment of $400, only $36.77 applied to principal

5/17 - Made minimum payment of $366.47, $125.00 applied to principal

 

I have made the $366.47 payment religiously before the due date, and when I tried paying a higher amount, it seems I was penalized for it. Refinancing the vehicle is not an option, as the balance is higher than refi allowed (Total balance to date is $11,451.08, which is discouraging since the loan was for $12k to begin with, and have paid over $6,600 so far). I will try making an additional payment a week from Thursday, but hold little hope that this will much help my principal based on current experience.

Message 1 of 3
2 REPLIES 2
Llewelyn
Regular Contributor

Re: Buried by Santander


@Xihuitl wrote:

3/8 - Made minimum payment of $366.47, $121.84 applied to principal

4/19 - Made payment of $400, only $36.77 applied to principal

5/17 - Made minimum payment of $366.47, $125.00 applied to principal

 

I have made the $366.47 payment religiously before the due date, and when I tried paying a higher amount, it seems I was penalized for it.


You were not penalized for your higher payment.

5/17 was four weeks after 4/19. So on 5/17 you only paid four weeks worth of interest ($241.47).

But 4/19 was six weeks after  3/8.  So on 4/19 you had to  pay six weeks worth of interest ($363.23).

Had you only made the minimum payment on 4/19, only $3.24 would have been applied to the principal.

So the higher payment did help you.

 


@Xihuitl wrote:

Total balance to date is $11,451.08, which is discouraging since the loan was for $12k to begin with, and have paid over $6,600 so far.

Even if you only  do  minimum  payments, about 30% of your payments currently  go toward the principal.  So  $6600 should have reduced the principal by almost $2000.

Do the $6600 include a down payment?

Did you miss some of the monthly payments?

When did you buy the car?

Message 2 of 3
pipeguy
Senior Contributor

Re: Buried by Santander


@Xihuitl

Welcome to the forums.

 

Santander is not exactly known as a "prime lender" however without knowing the details of your loan it is difficult to give you a good answer. I'll offer some general comments: Most car loans today are "simple interest" meaning interest is earned daily on the unpaid principal and typically are expressed in loan disclosures on an annual rate that assumes you make all payments on the due date. If you pay early or more than minimum your overall interest paid is less (not in the apr but in the actual amount of interest). Although rarely used today through regulations and market forces, some loans use the rule of 78's where the interest is front loaded, I doubt Santander is using that formula, but if they are using the rule of 78's for your loan - do whatever you have to to get out of that loan ASAP.  https://www.debt.org/advice/the-rule-of-78s/

 

Your statement " Total balance to date is $11,451.08, which is discouraging since the loan was for $12k to begin with, and have paid over $6,600 so far" is troubling if in fact, you have paid $6600 already on a $12,000 loan and your balance is still $11,451 - this would suggest a very high APR, but again without the terms of the loan it's hard to be specific. Is the $6600 paid so far just for the car loan or does that include sales tax, delivery fees, add on's like Gap Insurance, etc - if so you got rolled by the dealer. 

 

Example: $12k financed for 48 months at 21% apr = $372 a month with a total interest cost of $5888 over the life of the loan (simple interest)

 

When you are "desperate for a car" and your credit scores are "suspect" you become a prime target for car dealers, especially used car sales, it sounds like you paid that price. 

 

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