Honda Car Forum

"Joseph Oberlander" <josephoberlander@earthlink.net> wrote in message
news:c%fdc.1352$k05.969@newsread2.news.pas.earthli nk.net...
> Gus wrote:
>
> > BTW, never answer the "how much of a monthly payment can you afford?"
> > question, never! Talk in terms of the principal amount, the term and the
> > rate - they determine the monthly payment & there's no CR insurance
> > hidden in there. Besides, no reason to pay $300/month if you can get the
> > car for $250/month.
>
> My favorite quote in this situation is: "If it's $237.82 a month, then
> that's what it's going to be."

i love it when they ask what you can afford. you say "$250/mo"

they say... "up to....?"
>
> The monthy payment scheme is the worst scam of all. Show me a balance
> and the interest rate. Calculate payments from that.(any decent
> calculator or PDA can do this)
>

"Caroline" <caroline10027remove@earthlink.net> wrote in message news:<laDcc.18158$lt2.15050@newsread1.news.pas.ear thlink.net>...

> As much as I loathe car dealers, I thought the guy speaking for car dealers had
> a point: People are free to arrange their own car financing. He has no
> obligation to do the research for consumers. He's trying to make a living.
>
> His comment that "the best deal" available was the "deal on which all parties
> agreed" was slippery. Yet, only if people do not read and take their budgets
> seriously would they go into a car dealership thinking the car dealer was trying
> to give them a break.

I agree, but I was the only one in my family who felt that way. The
dealership is offering a service (on-site financing). Why should they
not be allowed to charge for that service? Some customers don't
realize they can decline that service, or get it at a lower price, but
whose fault is that?

dold@DealerXRes.usenet.us.com wrote:

> MAT <marcoatRM_SPAM@del_spamsnotmail.com> wrote:
>
>>I suggest bringing a PDA with a loan calculator program on it when dealing
>>with the finance department. When I bought my civic with Honda financing,
>>1.9% promotion, the payment looked high, I calculated the numbers and the
>>monthly payment was about 20 dollars high. I asked the finance guy what the
>>discrepency was and he said "Oh, that's insurance in case something happens
>>when you die so your family wont have to pay for it." I said "No thanks!"
>>What a little sneak! I was bitter, this guy tried to stick me with omething
>>without my knowledge!
>
> Was that credit insurance in case you died, or "gap" insurance, to cover
> the difference between the loan amount and the value of the car that your
> insurance company would pay if you car was stolen or totalled?

Speaking of gap insurance - the "Business Manager" at the dealer where I
bought my '03 Accord Sedan pitched it to me. I pointed out that I was
putting 1/3 down on the car, so I'd never be in an upside down
situation. She agreed, then asked me again a few minutes later. If at
all possible, put up enough cash/trade so your loan can't go upside down
(i.e., if your car gets stolen or totaled, the payoff amount exceeds the
value of the car before the loss).

Someone posted earlier about buying for cash & not financing anything. I
agree this has been a good policy for many years, especially when
interest rates were high; but money is so cheap now that I can make more
money on the amount financed by keeping it in my account than the loan
costs me, i.e., Honda is financing my car. I'm paying AHFC 3.64% and
made almost 20% on my money last year (which was a very good year - but
even if it were halved, I'm still ahead by financing).

Learn what's going on and don't accept any bullshit charges or explanations.

Joseph Oberlander wrote:

> Gus wrote:
>
>>> A typical auto loan is fully amortized so that if you win the
>>> lottery and want to pay it off, you still owe the full $30K
>>> on that $24K car.
>>
>> No way! Don't ever sign for a loan which has a prepayment penalty.
>
> That's not what I said. What they do is calculate the full interest
> into the loan and you make payments on the new total.

What new total? The no. of payments x the monthly payment always =
principal + interest for the term of the loan, but that's not the
balance you pay if you decide to pay off your loan. Sounds like
something a finance company, e.g., Household Finance, might do; but
they're terrible sources of financing to begin with.

> Other than
> a credit union, even the banks do this. There's no point in paying
> it off early, either, as the loan is front-loaded so that you are
> paying off interest only for the first year or two.
>
> They even do this on home loans 80-90% of the time. It's very hard
> to find a simple interest loan anymore other than personal lines
> of credit, which is why I recommended it.

I haven't encountered that (maybe I'm lucky (or spoiled - I'm retired
from working for a bank, so I'm used to getting a break compared to what
the public is paying)). I financed thru AHFC and pay simple interest.
There's no prepayment penalty and their Web site shows the declining pay
off amount going down every month, which is just the remaining principal
of the loan.

"Gus" <GusPod@optOFFline.XXXX.net> wrote in message
news:lO7dc.12020$Po2.4699433@news4.srv.hcvlny.cv.n et...
> mike wrote:
>
> >>Doesn't it depend on who's offering the best deal?
> >
> >
> > unless your credit is "tits", you arent going to get a special rate from
the
> > stealer.
>
> "tits"?

It's always been my understanding that tits are *good* thing.

Perhaps I'm wrong.

On Thu, 08 Apr 2004 21:02:11 GMT, "Stephen Bigelow" <sbigelowPOV@rogers.com>
wrote:

||
||"Gus" <GusPod@optOFFline.XXXX.net> wrote in message
||news:lO7dc.12020$Po2.4699433@news4.srv.hcvlny.cv .net...
||> mike wrote:
||>
||> >>Doesn't it depend on who's offering the best deal?
||> >
||> >
||> > unless your credit is "tits", you arent going to get a special rate from
||the
||> > stealer.
||>
||> "tits"?

If you have nice ones, you get the best rate?
Rex in Fort Worth

Joseph Oberlander said...
> Gus wrote:
> >> A typical auto loan is fully amortized so that if you win the
> >> lottery and want to pay it off, you still owe the full $30K
> >> on that $24K car.
> >
> >
> > No way! Don't ever sign for a loan which has a prepayment penalty.
>
> That's not what I said. What they do is calculate the full interest
> into the loan and you make payments on the new total. Other than
> a credit union, even the banks do this. There's no point in paying
> it off early, either, as the loan is front-loaded so that you are
> paying off interest only for the first year or two.

You're describing add-on interest loans. The quoted percentage rate
results in a much higher true APR. I guess I have to disagree and say
that I think there are very few add-on loans issued for new cars. My
loan through American Honda Finance Corp and it's simple interest with
no pre-payment penalty.

> They even do this on home loans 80-90% of the time. It's very hard
> to find a simple interest loan anymore other than personal lines
> of credit, which is why I recommended it.

I haven't seen *any* mortgage loans like you're describing and I work
with a lot of mortgage brokers. There's way too much competition in
the business for someone to accept that type loan. Even a prepayment
penalty (6 months interest) is a hard sell.



Casey

Took me quite awhile to get rid of pp. The loan officer never mentioned to
me. I had to find out from reading the contract. If my case is like others
cases, people don't actually know that they have pp on their loans through
AHFC.

As for home mortgage, there were very few loans with pp that I processed.
For people that were really marginal on income, they had to opt for pp to
reduce the interest a bit so that they could qualify for the loans.

Casey wrote:

> You're describing add-on interest loans. The quoted percentage rate
> results in a much higher true APR. I guess I have to disagree and say
> that I think there are very few add-on loans issued for new cars. My
> loan through American Honda Finance Corp and it's simple interest with
> no pre-payment penalty.

Casey wrote:

> You're describing add-on interest loans. The quoted percentage rate
> results in a much higher true APR. I guess I have to disagree and say
> that I think there are very few add-on loans issued for new cars. My
> loan through American Honda Finance Corp and it's simple interest with
> no pre-payment penalty.

As far as I know, other than credit unions and the like, nobody
out here in California offers simple interest with no pre-payment
penalty.

My point is - get this type of loan only. It gives you power to
pay down the loan faster when times are good and make the
minimum when it's a bit tight.

Not one of the auto dealers in Los Angeles offers this sort of
loan, though maybe if you get factory financing it's different.

> I haven't seen *any* mortgage loans like you're describing and I work
> with a lot of mortgage brokers. There's way too much competition in
> the business for someone to accept that type loan. Even a prepayment
> penalty (6 months interest) is a hard sell.

It must be different out here. My friend has a loan through
Countrywide (was Wells Fargo) - and they all front-loaded
the interest on the entire loan. 4 years and he'd only built
up 5% equity on a 30 year loan.

Joseph Oberlander said...
> Casey wrote:

> > I haven't seen *any* mortgage loans like you're describing and I work
> > with a lot of mortgage brokers. There's way too much competition in
> > the business for someone to accept that type loan. Even a prepayment
> > penalty (6 months interest) is a hard sell.
>
> It must be different out here. My friend has a loan through
> Countrywide (was Wells Fargo) - and they all front-loaded
> the interest on the entire loan. 4 years and he'd only built
> up 5% equity on a 30 year loan.

Yeah, but that's the way a 30 year mortgage works. You pay simple
interest on the unpaid balance. It's not "front-loaded", it's just
that you're paying interest on a large balance. About 4 years into the
loan, you probably would have paid off about 5% of the original
principal amount. As the principal owed decreases, the interest
decreases, and the amount going to principal each month increases.

Look at an amortization table. The amount going to principal in the
beginning years is very small. Most loans allow you to pay extra each
month if you want to.

There's nothing different about a 30-year fixed mortgage and a simple
interest car loan except the term on the car loan is much shorter (so
far...).



Casey