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How is Auto Interest calculated?

Regular Contributor

Re: How is Auto Interest calculated?

Yes I actually did the math wrong and noticed after I sent it. I'm on my tablet and would be too difficult to correct haha. Yes just plugged the those numbers in and thats exactly what I got

Message 21 of 30
Regular Contributor

Re: How is Auto Interest calculated?

Went to the dealer today

quick question.

How can I figure the total cost I am paying for the phone

do I just add the total amount of interest to the cost of the car.

Or

do do I add the total of all the monthly payments to the total cost of the interest ?

Message 22 of 30
Moderator Emerita

Re: How is Auto Interest calculated?

The cost of the vehicle is the contract price you negotiate plus what ever fees you agree to (and are required) such as tax, tags, title, gap, warranty etc.

I think what you are trying to do is figure out the total cost of the vehicle + the cost of the money borrowed.  The cost of the vehicle is separate from the cost of the money borrowed. Don't confuse the cost of the vehicle with the cost of the money to purchase the vehicle. Those are two separate negotiations.

Money always costs something if you borrow it. And if you use your savings and pay in cash, you have an opportunity cost loss associated with using your savings (lost opportunity to use that money on an investment that may return more than the cost of interest for borrowing the same amount). You have to figure out for yourself which is the best use of your money.

If you go to bankrate.com and pull up the auto financing calculator and look at the amortization schedule for the amount you finance - you will see a total at the bottom of the interest column of all the interest paid during the life of the loan. There is an interest column, principal column and total column. Beware:  the amortization schedule assumes that the payment will be made on time each time (due date) during the loan. So if you pay early you will pay less interest and if you pay late you will pay more.

Message 23 of 30
Contributor

Re: How is Auto Interest calculated?

can anybody figure out for me simple daily interest 10.54 APR from 7-31-07 to 8-22-07 on \$20539.51? i'm so confused. i was charged \$207.59 interest and \$157.41 went to principal on my first \$375 payment. it doesn't sound right to me and does not match any amorization schedule i look at. they told me to take 20531.51 x10.54% divided by number of days in that year. can anyone confirm i was charged correctly?

Message 24 of 30
Regular Contributor

Re: How is Auto Interest calculated?

What type of loan did you take out?  What is in the fine print?

On traditional loans, the first year's total annual interest paid is always less than the Principal * APR: \$20,539.51 * 0.1054 = \$2,164.86.

The reason total annual interest is less than the number above is because with each monthly payment, the principal (loan balance) is reduced.  As the monthly loan balance decreases, interest paid for subsequent months are less than prior months.

At 10.54% APR on a Princpal of \$20,539.51, the total interest paid for the first 12-months is around \$2,048.66.

Also, when were the funds dispersed to your account and when is the monthly due date?  Base on the numbers you provided, there were 35 days of interest accrual (on a 365 calendar year).

Message 25 of 30
Contributor

Re: How is Auto Interest calculated?

i bought the car 7/23/07 but the detailed payment history they sent me says loan started 7/31/07 and first payment was due 8/22/07. then it also says -63.70 due on 8//22/07 for deferred expense and commitment fee assement +\$125.00 paid 8-22-07. i was charged \$198.42 by the dealer and was to be paid on my behalf so i am wondering why it shows the way it does. wondering where my \$198.42 went. also trying to match up the numbers as my first statements came with a due date of 9/1 or 9/2 and they called after accepting payment and said my due date had to be changed to 8/22 b/c that it was my contract says and it does sayspayments due 8/22. i think the dealer & bank ripped me off in some way. i am really mad b/c i paid enough in nov 2013 for the loan to be paid but they posted my payment 4 days later causing another statement to generate causing me to be 90 days late b/c an extra payment was not in my budget. no sooner i pay it off someone totals the car and now i am unable to buy another one at a reasonable price. so i am going to try to dispute the loan being paid in nov and get them to remove the two 90 days late & refund the payment they collected in feb and if thats fails then i am going to try to prove they changed my terms after accepting payment. i feel really ripped off by this bank and so far they are very uncooperative. dealer told me the interest was high b/c it was a better loan then most but i'm not really sure my loan was any better in which case i should not of even had to pay 10.54% my husband had good credit when we bought the car and my credit wasn't bad. i think considering they moved my due date up and my maturity date up i think it is very unreasonable to then charge me \$10 to take a phone payment and then not post in in their books 4 days later. the check cleared my bank before the next statement date and i told them when they took it i wanted to pay off the loan if the payment was enough. i asked for the pay off and she told me she didn't know. i paid some payments 2 at a time so paid off in less then 75 payments and i think somehow that messed up my credit reporting. experian shows the last actual payment was paid on nov. 30 but no actual payments are shown only payments due and date received. it's all just so weriod. just trying to educate myself before i start making complaints to BBB and then consumer financial protection bureau. i want the two 90 days and one 60 day removed or i want the entire account deleted.

Message 26 of 30
Regular Contributor

Re: How is Auto Interest calculated?

Unfortunately charges and fees assessed by dealers usualy aren't applied to any loan payments unless it's explicitly stated in the purchase documents.  I suspect the charges the dealer accepted "on your behalf" may have been for document & titles fees or loan origination fees.

I recommend looking at the Truth In Lending document provided by the financial institution.  It will provide the numbers used to calculate your payments. If the document says your due date is the 22nd of each month, then your first payment was technically late regardless of the "statement" due date.  As a result, you may have been assessed late fees, which may explain why total charges were \$207.59.  However, you may have grounds to dispute this error.

In addition, as furstrating as it may be, fees for phone payments are not unheard of.

Message 27 of 30
Contributor

Re: How is Auto Interest calculated?

i had 10 grace period so no late fee should of been charged. my 1st statement came with a due date that was different then what my contract said and was paid according to the due date on that statement. then terms were changed. so in reality i paid it a day or two early but when they changed the terms it made that payment 5 days late. just another way i was  ripped off & manulipated into terrible terms. i also got an email on 9-25-12 that a payment was cancelled through their bill pay agreement as the checking account i had on file was closed but no payment was ever made from the closed account. after  that is when credit reporting changed in the way late's were determined. seems as if no payment was actually cancelled but it changed which payment i was paying next maybe. idk they say my terms were 75 payments not months. credit reporting says 75 months and they deleted that off then added it back so seems fishy to me. seems as if i paid 2 payments at once it counted as 1 payment creating late's that may not match my statments. seems fishy that no actual payments are reported and the last payment they collected in feb never reported as being schdeuled or paid. not sure how they can determine reporting is accurate when it is not. 1st 4 payments not even reported to transunion at all so no credit for those payments even being paid. i so want to win this dispute b/c they are such a shady lender and i don't think it is right they get away with it.

Message 28 of 30
Established Contributor

Re: How is Auto Interest calculated?

First off the 10% rate in 2007 wasn't a terrible rate at that time.  Treasuries were yielding ~5% at the time, so prime auto credits should have been in the 8.5% range.  Secondly, you won't get much traction trying to get the lates removed by being aggressive.  You need to plead with them for a goodwill adjustment.

Thirdly, loan contracts never state months always state payments.  WHy?  Because you are repaying the loan in payments, whether they be weekly monthly or annualy scheduled it is the number of payments over the time alotted.  Thus the interest is calculated properly.  What if you miss a "monthly" payment, how would this be stated if the loan were for 75 months and not 75 payments?  See how that makes it more difficult.

It would have been easy to get the late payments reversed back then, tough now.

The time to get this straight was back in 2007 unfortunately.

@kittywitty wrote:

i had 10 grace period so no late fee should of been charged. my 1st statement came with a due date that was different then what my contract said and was paid according to the due date on that statement. then terms were changed. so in reality i paid it a day or two early but when they changed the terms it made that payment 5 days late. just another way i was  ripped off & manulipated into terrible terms. i also got an email on 9-25-12 that a payment was cancelled through their bill pay agreement as the checking account i had on file was closed but no payment was ever made from the closed account. after  that is when credit reporting changed in the way late's were determined. seems as if no payment was actually cancelled but it changed which payment i was paying next maybe. idk they say my terms were 75 payments not months. credit reporting says 75 months and they deleted that off then added it back so seems fishy to me. seems as if i paid 2 payments at once it counted as 1 payment creating late's that may not match my statments. seems fishy that no actual payments are reported and the last payment they collected in feb never reported as being schdeuled or paid. not sure how they can determine reporting is accurate when it is not. 1st 4 payments not even reported to transunion at all so no credit for those payments even being paid. i so want to win this dispute b/c they are such a shady lender and i don't think it is right they get away with it.

Message 29 of 30
New Visitor

Re: How is Auto Interest calculated?

You can also ask for the loan interest concessions as it is included into the salary amount if you into job. For me it comes under the (Mod Cut-Im sorry such links are taboo on myFico)

Message 30 of 30
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