@Anonymous wrote:Not sure i understand everything you are saying here. Let me see if i can explain.
You said
"why choose to pay interest? "
becoz paying SIMPLE interest on an auto loan is not the same as a mortgage loan or commercial loan. of course, i was eyeing small payments in lieu of paying interest, given my situation as i know it & covid19 happenings do not assure me that i will have continuous steady income for the next 4 years, so i opted for lowest payments. atleast that much i know i can pay. Eventually, if everything goes as planned, i will have steady consistent scheduled affordable payments i can live with upon refinancing on my own terms with a bank/lender.
You said
"When making larger payments, you will end up making future payments due smaller, even eventually needing to pay 0 some months. If you continue to pay on a month that 0 is due, you will push your payment out further.">>>>>> i haven't quite understood how that is? explain.
You are betting that i will have $379/mo available for the next six years. I dont think so given the present circumstances. Its risky for me.
once a loan agreement is reached, you are on a schedule. On 29th of each month, you are scheduled for a $378/ mo in payment to Ford Motor Credit. The scheduled payment consists of Principal & Interest.
If anything paid over and above the scheduled payment applies first to the principal & thereby reduces the principal. In reducing principal, the daily rate of interest accrued is still accumulating & is applied to remaining principal balance to calculate P & I. (An amortization schedule breaks down how much goes to principal & how much goes to interest).
The amount scheduled is due on 29th. I cannot skip it. if i come across extra $$$ i can pay towards the loan.
For any unforeseen reason, i do not like to find myself not having the $378 available to me every month even 4 years from now. I would not like myself to be put in such a miserable situation. so to me, 84 months with $378/mo in payment, even if interest is charged made sense; thats just my thinking & I stand by it.
I guess there can or is a better explaination, however, i did what i felt was good & right for me.
but still paid $3,700 under sticker.
i paid MSRP 30k less invoice/dealerdisc = $26910
June 29
Opening Bal : $26,900
SchedulePay: $378. (eg: $111 Interest; $ 276 Prin)
On June 30; Added $: $500 (To principal only; designated as such).
July 29
Opening Bal: $26,900 - $276(Prin) = $25,724
Added $500: $25,724-$500 = 25,224
Sched.Pay : $ 378 (eg: $110 Int & $268 Prin)
So the
$25,224 - $268(Prin) = $24, 956
Add $500: $24,956-$500= $24,456
In above example, i cannot afford to make $407 in payment every month for 6 years (if i m scheduled for that); Maybe every month i can only afford to pay $373; no matter what ; i may have the extra $$$ in the first few months of the loan but really only can come up with my scheduled amount by the due date.As i explaiined, i was only thinking PAYMENT $$ & not so much INTEREST? Also, thinking i would refinance it in few months to get to an affordable scheduled payment that way in future i will have to come up with fewer $$$ . I just dont know if i can ever skip a payment & make it up with two months or three months of payments together at one time.
Beginning Principal balance/loan amount = $26,910 ; Amortization schedule is shown below. (upto Dec)Jun, 2020
$110 Interest
$269 Principal
$26,641Balance
+ Add $500 to principal
Jul, 2020
$109 Interest
$270 Principal
$26,371
+ Add $500 to principal
Aug, 2020
$108 interest
$271 Principal
$26,099 Balance
+ Add $500 to principal
Sep, 2020
$107 Interest
$273 Principal
$25,827 Balance
+ Add $500 to principal
Oct, 2020
$105 Interest
$274 Principal
$25,553 Balance
+ Add $500 to principal
Nov, 2020
$104 Interest
$275 Principle
$25,278
+ Add $500 to principal
Dec, 2020
$103 Interest
$276 Principal
$25,002
+ Add $500 to principal
Interest paid by the end of 2020 comes out to $746 per that schedule. That comes directly out of any money saved from rebates. For Ford motor credit, all of those $500 principle only payments, could have pushed your $0 payment due out for many months, and still paid no interst. Plus the almost 2 full payments the interest ate up.
@Anonymous wrote:so have you bought GAP insurance for people having financed for 84 mos. i called up my credit union & they dont have it. Gap Direct requires upto 72 mos financing only to offer gap insurance. i need to find out who would offer me best GAP insurance.
StateFarm, AllState LibertyMutual, nationwide, Farmers, 21st Century(not in tX where i m) have no insurance. GapDirect only covers upto 115% max of KBB while most Dealers cover upto 150% max KBB.
In the past, I've bought gap insurance from Gap Direct, but I don't know if they cover 84 month loans. Some lenders, manufacturers, and insurance companies (e.g., State Farm) offer gap insurance, but only if you finance with them.
On a side note-Dealers ALWAYS want you to think that you have to choose between Zero Percent financing and rebates. But that's simply not true. If a dealer tells you that, find one that will give you both, especially if they want to sell you a car badly enough. Negotiate, negotiate, negotiate!
....That is actually not true if a certain Lender is only offering 0% or 0% OR you can't do 0% AND, from time to time they will offer AND incentives but few and far between just wanted to correct that. ^^
@Anonymous wrote:I think i m coming to realize the mistake i did with my ford financing & taking the term i selected (4.9% for 84mos). There is just nobody who is offering GAP insurance/Policy individually other than GAP Direct & that requires 72 mos or less financing. So my next best option is to
REFINANCE with
DCU : GAP insurance is $295 for 18 months
FARM BUREAU BANK: $399 for GAP
GAP DIRECT: $185 for 24 mos; if refinanced for less than 72 mos term
Now that i m just in my very first month of payment, my options as i see it r
a) Balance is $27k; put 20% down upon refinance; ($ 5400) & forget GAP Insurance; ($2k in rebates + $3400 cash); (first year of new car depreciation averages 20%).
b) Stay with Ford Credit at 4.9% for 84 mos; pay down balance upto 6 months; until balance reaches $16k or better & then re-finance.c) Compared to AllState, statefarm or Nationwide the current insurance policy premiums on this new car is SIGNIFICANTLY better & would really dislike the idea of losing it for GAP insurance. my insurance company offers no type of GAP insurance whatsoever.
d) i really thought USAA offered GAP insurance called TOTAL ASSET PROTECTION; since 2019 it no longer offers it standalone or with auto insurance; now their auto insurance is written via Liberty Mutual.in Refinancing
What exactly is looked at? Do they require POI; or collateral is ok?
DCU is EQ5; I like to apply with TU pullling CU's like BECU, RBFCU or ???????
Will i actually do better than 4.9% for 84 mos or $379/mo in payment
Any suggestions?
DCU pulls EQ5 and requires POI. They will finance 120% of NADA retail. So you should be good. 4.99% @ 84, 3.99% @ 72, 2.49% 65 months requires 730 EQ5 to get best rates.