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Car loan shenanigans

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Car loan shenanigans

Hello! Think I've been had by the dealer, but I am unclear on some things, and need to find my original contract.

 

Anyway, the used car had a sticker price of $12,000

 

Said I wanted to get financing with a deposit, and let the dealer (yes, the dealer and not a credit union or anything) shop it around.

 

They said the loan price would be $13,500 after whatever. Still tolerable, the interest rate was tolerable, and I recall seeing this number repeatedly on the contract I signed.

 

Got car, no problems. Now I expected shenanigans, because they are car dealers. 

 

 

Fast forward to now:

 

I get a letter in the mail from the financing bank about incorrect terms on my contract and it is corrected to reflect the proper amounts, featuring a total car loan of $24,000, which I am paying off with $319/month. And that there was a finance charge of $5,000 included in this figure.

 

I am unclear how they got to that number of $24,000, and why this is essentially double the sticker price on the car. I can *KIND* of understand that 319/mo * 72months will equal ~22k-23k.

 

But What sort of shenanigans did I overlook? I am fine with the bad interest rate, fine with the hard inquiries from them shopping the car loan around, but the total price? Is this common?

 

Is that just the price if I make the minimum payment? Why doesn't it just say "if you only make the minimum payment this is what you will pay". Because I owe a bank $24,000 on a $12,000 car!

 

What?

 

any insight appreciated, thanks

 

State is California

Message 1 of 12
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Valued Contributor

Re: Car loan shenanigans

I have never heard of a dealer charging a finance charge before. Sounds like a way to make a little extra for the dealer.

As for the total loan amount, i am unsure if the statement or amount financed is wrong. But it sounds like the dealer had the total amount financed. What i mean is car price + finance charge + interest to paid. Although i could be wrong. I would look over your terms and possibly go back to the dealer about this. Because you signed a contract stating X price would be financed.
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Message 2 of 12
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Established Contributor

Re: Car loan shenanigans

Wow. You had to have been given a sales contract with terms on it. What does it say?

Message 3 of 12
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Re: Car loan shenanigans


@Skye12329 wrote:
But it sounds like the dealer had the total amount financed. What i mean is car price + finance charge + interest to paid. Although i could be wrong. I would look over your terms and possibly go back to the dealer about this. Because you signed a contract stating X price would be financed.

Yep, I got all the paperwork now. It got confusing because the financing bank has changed/corrected the terms and they are more favorable to me, but they haven't sent me the entire amended contract, which I have requested now.

 

So yes, the amount financed was one amount and it makes sense now, and the bank says the "finance charge" is the interest. which I still have difficulty calculating based on the APR, but I'll figure it out

 

In any case, doesn't look like I'll be going to the Consumer Financial Protection Bureau on this one Smiley Happy

Message 4 of 12
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Re: Car loan shenanigans

Two separate things happened:

 

1) Some terms changed.  Who knows what - you have the paperwork, but it is likely a minor interest rate change.  I can't comment on yours specifically, but it happens, probably "intentionally" quite often......

2) You have a high APR loan for a large amount of money over a long period.  So yes, that $12,000 car is going to cost you a lot of money in interest.

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Message 5 of 12
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Established Contributor

Re: Car loan shenanigans

This makes sense if your interest rate is about 24-25%.

 

 

Message 6 of 12
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Re: Car loan shenanigans


@mynameainttracy wrote:

This makes sense if your interest rate is about 24-25%.

 

 


bbbbasicallly lol

 

I accepted a 10% interest rate, and it is definitely not as simply as interest = ( principle * .10 )

 

I should get into this business

 

 

The reasons this was tolerable is because it the first lenders I would have gone to probably would have denied me due to some other credit blemishes. The dealers shopped it around with their subprime happy banks, hit me with a few inquiries right there, and got me financing.

Message 7 of 12
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Re: Car loan shenanigans

The $5000 finance charge is the interest. The $13500 could be $12k plus TTL but how do you get from $18.5 to $24k? Was there negative equity rolled into the loan or a bunch of add ons?
Message 8 of 12
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Re: Car loan shenanigans


@Chris679 wrote:
The $5000 finance charge is the interest. The $13500 could be $12k plus TTL but how do you get from $18.5 to $24k? Was there negative equity rolled into the loan or a bunch of add ons?

^^^This.  It is iimportant to determine where each and every cost came from so you can tackle the issue.  Seems like the dealership added in much, much more than TTL. 

 

OP, check the interest rate by using a auto calculator at bankrate.com or any of the other available calculators online.  The contract spells out the purchase price, the interest rate, the APR.  

Message 9 of 12
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Re: Car loan shenanigans


@ltv_shenanigans wrote:

@Skye12329 wrote:
But it sounds like the dealer had the total amount financed. What i mean is car price + finance charge + interest to paid. Although i could be wrong. I would look over your terms and possibly go back to the dealer about this. Because you signed a contract stating X price would be financed.

Yep, I got all the paperwork now. It got confusing because the financing bank has changed/corrected the terms and they are more favorable to me, but they haven't sent me the entire amended contract, which I have requested now.

 

So yes, the amount financed was one amount and it makes sense now, and the bank says the "finance charge" is the interest. which I still have difficulty calculating based on the APR, but I'll figure it out

 

In any case, doesn't look like I'll be going to the Consumer Financial Protection Bureau on this one Smiley Happy


itv-shenanigans.....  Take a look at two documents you received from the dealer.  This first is a signed bill of sale and the 2nd is a Retail Installment sales contract.  Depending in the state you live in these forms may have small differences but should be basically the same.  The bill of sale will state:  Purchase price, trade in (some states don't allow tax credit on a trade difference, sales tax, tag and title fees (these fees are determined by your states DMV) dealer fees (if any and this figure can vary from dealer to dealer) payoff amounts if you trade in a vehicle that has an existing loan, battery & tire disposal fees, and dealer add ons such as extended warranties, tire treatment etc..  Minus any deposits should be the total amount you paid cash for or financed in your case. 

Look at your retail installment contract.  It will show:  Interest Rate, Finance Charge (amount of $ you will pay for in interest  if you don't pay anymore than your monthly payment for the life of the loan), Amount financed...this is the bottom line on your bill of sale,and Total Sales Price which includes your downpayment if any or trade credit, plus interest. Next you will see the months (term) financed, Amount of your monthly payments and When your payments are due each month.   The lines below will be an itemization of the Amount Financed.... the bottom line equals the amount financed on your bill of sale.

Once you sign, the bank or dealer can not change this contract without your signature on a new retail installment contract.  Same goes for the bill of sale.  If mistakes are made, the dealer is obligated to contact you first and have you sign an amended bill of sale and/or retail installment contract.  The dealer and the lender should be reported if they failed to do this.

It's difficult to understand these contracts.... some people never read them and they should.  I admire you for at least questioning your purchase and your retail installment contract.

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