What Interest Rate Did You Get?
03-30-2015, 12:17 PM
#21
Senior Member
Some scary financial math being calculated here. You absolutely do not pay your current balance times the APR in interest in bulk at a loan refinance...as has been stated, you pay the current ACCRUED interest. Bottom line, there's no financial penalty at all with financing at a dealer to get an extra rebate, and then turning around and refinancing. The only reason that I don't do it is that I don't want the extra credit inquiries on my report, which can lower your score slightly. But even I admit that's a small, and temporary, penalty.
My example above assumed the loan would be paid back at full term making minimum payments.
03-30-2015, 12:17 PM
#22
Senior Member
That's what I thought you guys were saying, its definitely not smart to say the least...For a 50k dollar truck, you are paying $2450 in interest at 4.9%. Plus, now you are paying your new loans interest at 1.74%. So, $2450-$1000(rebate)=1450+870(1.74%)= $2320. You saved $130 in the end.
Doolin didn't mention rebate, but we'll assume and give both figures. He financed at 4.1% and later refinanced at 1.99%. For a 50k dollar truck, $2050 is the interest at 4.1%. Refinance the loan for 1.99% is $995 in interest for a 50k dollar truck. $2050(original 4.1%)+$995(refinance 1.99%)=$3045. If he got a $1000 rebate from the dealership, you could think of it as $3045-$1000=$2045. He saved $5.
I hope those numbers are easy to understand, as I'm sure you already know, in order to refinance a loan you have to pay off the old loan and interest. That's why I added the previous left over interest to the new.
Now you could have just got your banks interest rate in the beginning, and still had the dealership match Ford's finance rebate and trade-in rebate like they did for me and about a 1000 others. My credit union did a .9% rate and the dealership also matched the two incentives by Ford. That should be $3000-$5000 in savings just at the finance level.
Doolin didn't mention rebate, but we'll assume and give both figures. He financed at 4.1% and later refinanced at 1.99%. For a 50k dollar truck, $2050 is the interest at 4.1%. Refinance the loan for 1.99% is $995 in interest for a 50k dollar truck. $2050(original 4.1%)+$995(refinance 1.99%)=$3045. If he got a $1000 rebate from the dealership, you could think of it as $3045-$1000=$2045. He saved $5.
I hope those numbers are easy to understand, as I'm sure you already know, in order to refinance a loan you have to pay off the old loan and interest. That's why I added the previous left over interest to the new.
Now you could have just got your banks interest rate in the beginning, and still had the dealership match Ford's finance rebate and trade-in rebate like they did for me and about a 1000 others. My credit union did a .9% rate and the dealership also matched the two incentives by Ford. That should be $3000-$5000 in savings just at the finance level.
unless there is a clause stating all interest needs to be paid than you are dead wrong on all of that above. I have financed at dealer level a few times in order to get additional rebates and I can 100% assure you I was not charged the interest of the full loan when I refinanced it within weeks. the finance charge was like in the $20 range.
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roadPilot (03-30-2015)
03-30-2015, 12:38 PM
#24
Senior Member
03-30-2015, 12:43 PM
#25
Senior Member
It is called "Simple Interest" because as stated the interest is compounded on the remaining balance each month. So there is a early payoff amount and there is a dollar amount added each day until the loan is paid in full.
03-30-2015, 12:44 PM
#26
03-30-2015, 12:48 PM
#27
Senior Member
My statement just came in...for my trucks new loan. The payoff is approx $145 higher due to interest when my 10 day payoff is calculated. There is no prepayment penalty. I only pay the interest accrued for the time I've had the loan/last payment. I will happily pay that amount ($145) of interest for the month. My payment will now drop by approx $42 per month. By my 4th payment the amount I paid in interest on the first loan will be paid back by my monthly savings (145/42=3.45)
If I kept this original loan I will have paid approx $5600 in interest. With my new loan, I will have paid in $2700 in interest over the life of the loan. So I will save $2900 in interest over the life of the loan.
03-30-2015, 12:48 PM
#28
I'm going to use Alliant - up to 60 months at 1.99%. There are some membership requirements (e.g. work for covered employer, eligible family member, etc).
PenFed typically has good rates as well - anyone can join for a donation of $15. Currently 1.49% for 36 months, 1.99% for 48 months.
Looks like some others are doing even better.
PenFed typically has good rates as well - anyone can join for a donation of $15. Currently 1.49% for 36 months, 1.99% for 48 months.
Looks like some others are doing even better.
03-30-2015, 02:08 PM
#29
Simple interest notes have no penalty for paying off early. if they refi they do not pay the interest on the prior loan.
03-30-2015, 02:10 PM
#30
[QUOTE="Matt_RTR_FX4;4093839"]
Huh?? He would save over $5,000 in interest by refinancing at 1.75. 50k, at 4.9 for 72 months equals $7,800 in interest if minimum payments made. Same scenario at 1.75% equals $2,700 in interest. Plus he got an additional $1,000 rebate by financing with dealer. Sounds like a no
Huh?? He would save over $5,000 in interest by refinancing at 1.75. 50k, at 4.9 for 72 months equals $7,800 in interest if minimum payments made. Same scenario at 1.75% equals $2,700 in interest. Plus he got an additional $1,000 rebate by financing with dealer. Sounds like a no
Last edited by bt_osu; 03-30-2015 at 02:19 PM.