I'll consider getting a 2010+ when I can get them with about $10,000 in depreciation. That's exactly how long I waited for my '06.

 

Like many, I hate car payments! Even more when I learned how the interest works! I wish the interest/principal ratio was constant throughout all payments. But sadly thats not he way it works!

 

Can you explain that 9million? I heard that there is almost no incentive to paying off a car loan early. That you pay the same amount of interest whether you make double payments or not. Is that what you're getting at?

 

Below is a 60 month $20,000 simple interest loan with 6% interest. Compare the interest amount from payment # 1, then payment #59. Also, compare the amount that goes toward the principal. You can see scheme! After 2 years of financing, add it up, they pretty much have a huge portion of the interest. In the end, if you pay all 60 payments & dont pay it off early, you have been charged $3200 in interest. There are other loan where they throw the interest in at the beginning, which is rediculous. This may be the kind of loan you are talking about. This kind of loan would mean (using example above) instead of financing 20,000 you would be financing 23,200, thusly making a higher monthly payment. Its like financing at 0% but you are financing price & interest rather than just the price (20K). If you ever plan on paying a car off early, you better go with the simple interest. If you plan on paying the car for 60 months, then either loan type would equate to the same outcome.

Months*Payment*Principal*Interest*Balance

1*$386.66 *$286.66 *$100.00 *$19,713.34
2 $386.66 $288.09 $98.57 $19,425.25
3 $386.66 $289.53 $97.13 $19,135.72
4 $386.66 $290.98 $95.68 $18,844.74
5 $386.66 $292.44 $94.22 $18,552.30
6 $386.66 $293.90 $92.76 $18,258.40
7 $386.66 $295.37 $91.29 $17,963.03
8 $386.66 $296.84 $89.82 $17,666.19
9 $386.66 $298.33 $88.33 $17,367.86
10 $386.66 $299.82 $86.84 $17,068.04
11 $386.66 $301.32 $85.34 $16,766.72
12 $386.66 $302.83 $83.83 $16,463.89
13 $386.66 $304.34 $82.32 $16,159.55
14 $386.66 $305.86 $80.80 $15,853.69
15 $386.66 $307.39 $79.27 $15,546.30
16 $386.66 $308.93 $77.73 $15,237.37
17 $386.66 $310.47 $76.19 $14,926.90
18 $386.66 $312.03 $74.63 $14,614.87
19 $386.66 $313.59 $73.07 $14,301.28
20 $386.66 $315.15 $71.51 $13,986.13
21 $386.66 $316.73 $69.93 $13,669.40
22 $386.66 $318.31 $68.35 $13,351.09
23 $386.66 $319.90 $66.76 $13,031.19
24 $386.66 $321.50 $65.16 $12,709.69
25 $386.66 $323.11 $63.55 $12,386.58
26 $386.66 $324.73 $61.93 $12,061.85
27 $386.66 $326.35 $60.31 $11,735.50
28 $386.66 $327.98 $58.68 $11,407.52
29 $386.66 $329.62 $57.04 $11,077.90
30 $386.66 $331.27 $55.39 $10,746.63
31 $386.66 $332.93 $53.73 $10,413.70
32 $386.66 $334.59 $52.07 $10,079.11
33 $386.66 $336.26 $50.40 $9,742.85
34 $386.66 $337.95 $48.71 $9,404.90
35 $386.66 $339.64 $47.02 $9,065.26
36 $386.66 $341.33 $45.33 $8,723.93
37 $386.66 $343.04 $43.62 $8,380.89
38 $386.66 $344.76 $41.90 $8,036.13
39 $386.66 $346.48 $40.18 $7,689.65
40 $386.66 $348.21 $38.45 $7,341.44
41 $386.66 $349.95 $36.71 $6,991.49
42 $386.66 $351.70 $34.96 $6,639.79
43 $386.66 $353.46 $33.20 $6,286.33
44 $386.66 $355.23 $31.43 $5,931.10
45 $386.66 $357.00 $29.66 $5,574.10
46 $386.66 $358.79 $27.87 $5,215.31
47 $386.66 $360.58 $26.08 $4,854.73
48 $386.66 $362.39 $24.27 $4,492.34
49 $386.66 $364.20 $22.46 $4,128.14
50 $386.66 $366.02 $20.64 $3,762.12
51 $386.66 $367.85 $18.81 $3,394.27
52 $386.66 $369.69 $16.97 $3,024.58
53 $386.66 $371.54 $15.12 $2,653.04
54 $386.66 $373.39 $13.27 $2,279.65
55 $386.66 $375.26 $11.40 $1,904.39
56 $386.66 $377.14 $9.52 $1,527.25
57 $386.66 $379.02 $7.64 $1,148.23
58 $386.66 $380.92 $5.74 $767.31
59 $386.66 $382.82 $3.84 $384.49
60 $386.41 $384.49 $1.92

 

keeping it

 

What's the point of the interest discussion? Of course, by paying the car off early you do not have to pay the interest for the last few months because there is no more loan.

It's always better to pay off a loan early unless the financial institution imposes penalties.

I think those other types of "interest first" loans are very rare. I'd never heard of them until I taught it to one of my classes. I can't remember the name of them.

 

I just wanna say we always pay off our cars immediately...and that saves so much money in the long run....

 

My friend had an interest first loan. He was 18 & had no idea what he got himself into. It puts you immediately upside down on you car you just bought. You are still screwed by financing because the bank gets most of the interest in the first couple years. For instance, using the example above, if you paid the loan off @ the 49th payment ( year early ) you only really saved like $100 in interest!

 

Highly modded and not all mine yet so I will be keeping her (except maybe to get a GT500)....LOL who knows but NOT buying a new one. saw it at the Dream cruise and it was OK. I talked with one of the Product design engineers from Ford at the event and it is still on the S197 platform but many other things have changed (some for the better and others well you decide). JMO