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I want to help my mother payoff her car note, but her story sounds a bit fishy to me.
Could someone with lots of car experience let me know if the following is possible… could someone REALLY get ripped off this badly or does it sound like my mother isn't being honest with me. I've always paid cash for older cars, so I don’t know the ropes when it comes to making monthly car notes.
Here it goes…
* In 2006, when she bought the car, the price tag price was $18,000.
* I think she said her interest rate was 23%.
* She paid a $1,000 down.
* Monthly payments were $490 for 6 years. $35,280 for 6 yrs + $1000 = $36,280 total.
* She’s paid a bit more than that on the car however. Maybe about $38,000 to $40,000.
And she said she still owes close to $7,000 on the car. Overall, she’s telling me that she’ll have to pay about $48,000 for a $18,000 car. $30,000 more than it is worth. Is this possible?
Has she ever refinanced the car?
Has she ever defaulted or missed payments?
If yes to either of the questions there's your answer.For all the other questions you may want to move it to the relationship forum.
No offense!
It sounds like your mom doesn't make good financial/business decisions.
Hi, yes, she had it refinanced through a bank in late 2012. Thanks.
Quote:
Originally Posted by hitman619
Has she ever refinanced the car?
Has she ever defaulted or missed payments?
If yes to either of the questions there's your answer.For all the other questions you may want to move it to the relationship forum.
No offense!
It sounds like your mom doesn't make good financial/business decisions.
This interest rate is too high. I wonder why people buy things like car with such a crazy interest rate where you pay mostly interest every month and principle stays pretty much the same.
At that interest rate and the amount of time she's paid on it it is entirely possible.
Does she actually still owe $7000 or is that how much she will pay if she continues to make monthly payments? If that's the total of her remaining payments the payoff will be much lower than that if you pay it off now. Regardless, she still owes way more than it's probably worth.
If you're able, pay it off for her and make her promise to never borrow money for a car again, at least without talking to you or someone else she trusts who is knowledgeable about such things.
Hi, yes, she had it refinanced through a bank in late 2012. Thanks.
Then That's why it's almost 48k.Not to be noisy,but what kind of car is it?
Also If you can afford it Help out your mom.
Also for other people thinking about refinancing a car
This is why its a bad ideal.
Quote:
f you refinance the car when your loan is upside down, the new lender may demand an upfront cash payment equal to the difference between the car's value and the amount you owe.
What's more, amortization begins anew with a new loan. This means your early payments will cut into interest much faster than principal -- and you might be saddled with another upside-down loan.
Beyond all that, you may find your payments won't fall much, unless you take on more payments. And borrowing money over longer periods is expensive.
Let's say you took a five-year, $25,000 car loan a little over two years ago at an interest rate of 8%. With a monthly payment of $507, you'll lay out $30,415 over the life of the loan.
After 27 payments (a total of $13,687), you'd owe about $15,000 in principal. Paying off that $15,000 would cost you another $16,728 over 33 remaining payments.
You might lower that cost by refinancing at a lower rate. But the savings might not add up to as much as you'd think -- especially if the new loan has a longer term than your current one. Why Car Loan Refinancing Is a Bad Idea | Credit Center | Auto Loans | Get the best rates on mortgage, home equity loans, CD, money markets and checking accounts | BankingMyWay
When you get a loan, if you read the paperwork, it SAYS what the total cost of all payments will be. Did she read the paperwork? Does she still have the loan paperwork? Read it!
Also you can add up the payments for each year. Multiply the monthly payment by 12 [months]. Then multiply that amount by the number of years the loan will be.
Have her check with her bank. If she has good credit, she may be able to refinance to around 3% or get a personal loan for a MUCH lower interest rate and use that to pay off the car. Use a loan calculator (search google) and you will see a BIG savings in total payments with a lower interest rate.
Note those "rent to own" places can charge upwards of 30% interest! I know someone who bought a $90 stereo there and paid $500.00 in payments for it! (All people look at is the "monthly payment"...)
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