@Anonymous wrote:
In 2007 I leased a new Toyota Camry with the understanding that I would at some point purchase the car. When the California State Tax went up this year, I went into the dealership to purchase the car. I was told my credit was good – my credit score was around 752. I signed a contract with two warranties added on, a contract for 71 months, with an APR of 9.14% ($6,348.23) added into the final total.
My first payment was due on 6/23 and was received at Toyota Financial on 6/24. The statement says a late charge of $19.46 is added on for payments not reached by 7/4/09. When I received my next statement, of the $389.10 I paid, only $223.93 was applied to my balance. The additional $165.17 is considered accrued interest which surprised me GREATLY since my payment was within the payment window!
When I signed the contract, I asked when I would receive my coupon book which I use to watch my balance decrease. I was told I would receive monthly statements, and now I see why since the balance can vary anytime Toyota feels necessary. Turns out that I have a Simple Interest Contract which is some type of amortization of the payments over the life of the loan. This was not ever mentioned to me. Why would I question what type of interest I was supposed to pay when the APR is already included in the balance?
What happened here? Apparently I can't have a coupon book but have not received an amortization schedule either. Payments never late, but the payment applied to the principle fluctuates.
Almost all (and I mean 90%+) car loans are simple interest loans. Interest accrues daily on the unpaid balance and yes standard amortization applies. Your first payment pays a large percentage of nothing but interest and little principal, your last payment pays mostly principal and little interest. Yes you will see a daily interest accrual amount.
In deference to you being told your interest was $6,348.23- Many states have disclosure rules in which the total amount of interest paid out, to the terms spelled out, over the length of the loan must be shown to the customer. If you make all your payments by the due date and in the amount spelled out, your total intererest will be $6,348.23.
The "if payment is made by XX date is standard." It allows people to make late payments without them being considered truly late, but tacks in a "fee" for both the unexpected additional daily interest accrued on the loan, and the convenience of being late. If this was not done, being even 3 days late would cause more daily interest to acrue and then be compounded and at the end of the laon you coul dowe significant amounts to truly pay the loan.
Payment Book- most banks quit using them a long time ago in this age of computers and online access as they are a unnecessary cost and in many cases due to paying off early and trading in, never truly used by 95% of the people who get them.
Turns out that I have a Simple Interest Contract which is some type of amortization of the payments over the life of the loan. This was not ever mentioned to me.
- may I ask what you were expecting?
Apparently I can't have a coupon book but have not received an amortization schedule either.
-you were told exactly what your interest would be to the laws of your state. Apparantly your state does not require an amortization schedule on car loans. You can easily plug your information into any of the myriad of online calculators and generate that schedule.
Payments never late, but the payment applied to the principle fluctuates.
-to the reality of standard amortization. What were you expecting?
I cannot imagine why you do not want a simple interest loan- I am unsure of any down side. If yo umade 2xs a month payments you would actually cut yor overall interest paid and pay your loan off early. If you PIF early you are not paying any unnecessary interest charges.
By the way, paying your car payment a day early, slightly over amount each month also lowers your overall interest paid as well.
