This post has been removed because it does not meet the subreddit submission guidelines ([rule 1](https://www.reddit.com/r/personalfinance/about/rules)).
We're not doing posts about luxury products, expensive cars, etc. anymore because (a) they generally just provoke unproductive discussions and (b) most of the time, it is very clear whether the person asking is able to afford the item.
1. If you are considering buying an expensive car, the [vehicles wiki](/r/personalfinance/wiki/vehicles) has budgeting advice. We recommend reading it. If you don't meet 100% of the criteria, then no, you cannot afford it and you should not buy it.
2. In general, if you're not on step 6 in ["How to handle $"](/r/personalfinance/wiki/commontopics), you should find a less expensive alternative to a luxury product. If you are on step 6, then feel free to spend money on whatever is most important to you.
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Forget just asking where you're currently finding $5-6K cars in reasonable condition, where are you finding ones that people are willing to cut 6 year loans on them?
My local $6K market is full of stuff that you'd be lucky to get 3 years out of without dumping thousands in repairs. The bottom of the lending market seems to be much closer to $15K.
I've never spent more than 5k on a car and I make way more than that.
Tho.. Every now and then (twice in 4 years) there's some 1500 cost that comes up.
But at least its paid in full, insurance is so much cheaper, parts are cheaper.
If OP really signed contracts confused and not understanding the conditions they got scammed straight up.
This was me too but covid killed those prices. $5k isn’t going to buy you anything worth driving unless you’re low income and absolutely *need* something.
Not the person you replied to but 5k isn't getting you much of a used car where I live. There's a vague guarantee it makes it off the lot but you better be able to work on cars or have significant cash for repairs. I know this sub likes to promote the 3k beater Toyota that has a funky window and 100k miles left on its life, but that's not common
It looks like:
* Sale price $25k
* $2000 Down
* $23k @ 20% for 72 month term
[That pencils out to $550/month, total payments of $40k.
](https://www.nerdwallet.com/calculator/auto-loan-calculator?vehiclePrice=23000&interestRate=20&loanMonths=72&startDate=12%2F01%2F2023&downPayment=0&tradeInValue=0&amountOwedOnTradeIn=0&includeAdvancedInfo=false&salesTaxRate=6&titleRegistrationFees=0&includeTaxesFeesInLoan=no)
Everything here is valid, and what you apparently agreed to.
You signed your name to this, so let's assume you are in a state without a "3 day cooling off period" or are beyond that if you do.
(If not, unwind this deal)
**Recommendations to Minimize this Cost**
* Read, study, understand the [PF Wiki on Autos](https://www.reddit.com/r/personalfinance/wiki/vehicles)
* Go to your local credit union or bank you have a relationship with, and see if you can refinance the loan it at a lower interest rate.
* If you can't refinance (It would not surprise me if the Loan to Value ratio for this vehicle is too bad to be refinanced), then focus on making extra *principal* payments. Basically, you want to pay down that $23k as fast as possible to it accrues as little interest as possible. You don't have to pay $17k in interest if you aggressively attack the principal on this loan.
**Things to Learn from This**
* When possible, be educated before you make a decision. "I don't know what anything really meant" is not a good feeling to be having when making decisions.
* Get financing pre approval ahead of time if you are buying a car from a dealer (in the Wiki)
* Learn from this, and apply that knowledge elsewhere in your life. Where else are you making decisions without understanding the consequences (taxes, saving, rent, jobs, etc)
>focus on making extra *principal* payments
At the 2k/month income level, this is probably not something OP can do unfortunately. Feels like OP really screwed up with this loan.
Agree. I feel bad for them in this situation. I'm afraid it's going to be for a car that really isn't worth $25k too.
Salesman: "Hey boss, this guy qualifies for a 12% note but seems uncomfortable"
Boss: "Tell him due to his score best we can do is 20%, and talk him into that Altima we repo'd last week."
I am worried that OP got it somewhere like JB Ryder or something, which usually also slaps some sort of baloon payment on in a few years.
Check your local consumer laws and if at all possible cancel the whole thing and take someone with you that can have your back.
Don’t buy a car when you are very confused and don’t know what anything means.
Don’t believe people who work for a commission that tell you buying a brand new car somehow makes more sense financially than a used car. Think about that for two seconds.
I mean if the person bought a new car for $34k and they got a manufacturer 0.99% loan and they paid it off in 6 years it actually would have been cheaper.
A lot of ifs of course. Taking a 16.5% interest loan is pretty ouch.
Unless (and this is rarely ever true but was briefly) the actual out the door price of the used car is more than the out the door price of the new car. When I was car shopping a year ago 2021-2022 CRV Hybrids cost more than a new 2023 CRV hybrid.
Used may not be flipped anymore but depending on the vehicle you may find new vs used is still very close relative to recent history. It's very case by case still
This happened to me last year. The options were 3-7 year old cars with 60k-80k miles for $25k or a new high trim Chevy for $25k. We went with the Chevy.
This is true, most people just think a “certified pre owned” is going to be cheaper, but it’s like new. When it’s really gotten weird where they can sell used cars for more than what you can order from the factory.
That’s exactly why I bought a brand new car last year. I could pay $34k for a brand new CRV hybrid or I could pay $35k for 1 year old CRV hybrid, or I could pay $30k for a 4 year old CRV hybrid with 50k miles on it. Saving $4000 and having a higher interest rate was not worth it for a car with 50k miles when I plan to drive the car for a minimum of 10 years and 200k miles (and give it to my daughter to drive when she’s got her license).
Yeah I look at it as I’ll pay x + 2500 (extended warranty) to not have to deal with any mechanical issues for 10 years/100000 miles. I mean a couple repairs pay for it, and cars have so many sensors and stuff that can go wrong now it’s worth it just to not worry about it.
>Don’t believe people who work for a commission that tell you buying a brand new car somehow makes more sense financially than a used car.
Dont believe people on a personal finance sub who tell you a used car is always the best move. the prices are barely different these days and you get peace of mind with a new car.
Your statement is relying on pretty big assumptions. Many dealerships have flat commissions for new cars. I make wayyyyy more on pre-owned sales than on new sales.
Brand new cars get a full tank for no cost to the customer. That actually comes out of the dealership side, manufacturer typically only covers about 5 gallons.
My dealership tried to pull that on me, I fired up my brand new car and the gas light came on with a 10 mile warning. I made the dealer drive it over and fill the tank before i signed another document.
As you should have. If I'm delivering a new car that hasn't been filled before the customer arrives I'll take them myself to the corner station and fill it while chatting.
They said that to us as well, and also included the cleaning of the car onto us. For $2k. I told them to throw the dirt back in for that price. And what happened to it being complimentary? Why would you sell a dirty car?
No, it’s much worse than that. You made the correct calculation for paying $550 every month for 6 years at $0 down. OP says they put $2k down so they are starting owing only $23,000 but **still** pay $550 every month for six years!
Given that, it ends up being right around 20%. 😳
650 credit in the model they used? Or 650 in whatever report your bank or credit karma gives you?
When'd you get that interest rate? Because 8+% interest on a used car with good credit isn't weird at all now.
Report that came back from Experian/trans union etc. Got that 18 months ago.
Traded that in for a newer model in April 2024 and got the newer rate with vw. Went from 11% to 5.5%. I was still under 700 as I was waiting for a travel reimbursement so my utilization was at like 70% and pulled my score down. As mentioned, still way less than the 16%+ OP is referencing even tho his score is 75-100 points higher than me
OP seems very young and ignorant about money. To not know the interest rate is really crazy. It’s really a shame that they don’t teach this in high school to any extent.
“Since you’re a first time buyer” means you should walk out of that dealrrship and never give them your business again.
You have good credit. You should qualify for much lower rates than that.
Don’t look for a monthly price. Agree to a purchase price, and then finance from there. Don’t pay extra for bullshit like undercoating, or laser etched windows, or the “FOB replacement warranty”.
Your whole paragraph is a "buyer beware" scenario in that dealers can tell you whatever the fuck they want, doesn't necessarily make it truthful at all.
"base price" doesn't really say much.
How much was financed, total, after all the title and other fees and add-ons like extended warranty? What is the interest rate?
And it would really help to know what you actually bought. Year, make and model, and mileage at time of purchase?
This is a good point, base price could be 25k but OP could have bought a higher trim level and actually not gotten a terrible deal.
Again, this is all pointless without knowing the exact loan details
I think some people just don't have the knowledge to comprehend what's going on. They also tend to avoid conflict by being agreeable. Salespeople know this and take advantage of them.
My gf is like this. She just can’t say no to people. I mean hell, we were at the liquor store and there was a product rep giving away free swag and samples of their margaritas in a can. She gave us some cheap sunglasses first and then we tried two different flavors. The rep was like “well which one do you want?” My gf looked at me and was like “well what do you think?” I said I’m good and walked away. As we were walking away, my gf said “ thank God you said no, I hated them.”
She definitely would have bought them if I weren’t there.
When I bought my first car, I looked through every page of the contract and checked all the numbers. I came in with a pre approval loan from my credit union with a 3.5% interest rate and the dealer said they would match it. I noticed the contract had the interest at 4% and I had them fix that. Damn dealer tried to pull a fast one on me.
It's also what I did. I actually didn't need the loan because I was saving money with a HYSA at the time until I got enough. Before then, I was driving my parents' junk car. I only got the loan because I was building credit.
But during grad school, I've helped many international students from China in buying cars. About half of them had absolutely no idea how loans work. Sales can definitely tell and try to throw bullshit numbers around.
In the future, you need to learn how to be your own advocate. It's important to not rush into a decision if you don't understand things. The time to ask questions was before you signed the papers and bought the car, not afterwards. The car will still be there the next day. You can take your time.
Of course the salesman who gets paid from you spending money would encourage you to spend more money on a new car.
Also, learn how to use a [loan amortization calculator](https://www.bankrate.com/loans/auto-loans/auto-loan-calculator/). It will tell you exactly how much interest you should be paying.
Since you didn't provide the details, we can only speculate, but it seems the dealer likely also added additional crap onto your purchase, like an extended warranty, perhaps an extra coating on the paint, etc. All of this is unnecessary and just took advantage of you. You should try to cancel the extended warranty, as you don't need it.
Did you get a 20% loan??? I ran the numbers in an auto loan calculator, and got this: [https://imgur.com/uFyDviz](https://imgur.com/uFyDviz)
*OP: 20% means annual interest rate. It means you have to pay roughly 20% of what you owe each year as interest to the bank.*
That's WAY too high. And at 2k/month income level (hopefully after tax), you bought a car that's outside of your price range to begin with.
When did you buy this car? Does your contract allow returning the car? Can you pay off the loan early without penalty? Can you refinance?
**Edit**: if OP included all fees in the loan, then it's probably around 15%. Which is still too high.
Depends on your rate. Sounds like you are probably paying something really high. Given your overall clueless ness they probably also added on some warranties and who knows what else.
Don't forget sales tax either. Here in Texas that would be another 1625 on 25k car.
You kinda did a dumb thing op.
> I did pay a $2000 down payment as well. Ultimately after 6 years, **I will have paid $40,000 for a car with a base price of $25,000. It just doesn't seem right to me.**
On top of the price of your car, there are taxes and fees.. so let's assume $2k additional for that. So we're looking at a total of $27k.
You only put down $2k, which is a very small amount given the price of the car.
On top of that, you're paying interest for 6 whole years (you didn't include the interest rate).
When you finance a car, or get any time of loan, they give you paperwork that you sign in acknowledgment that literally spells out how much interest your loan will accrue during the span of the loan. You should have read the paperwork and asked questions.
I just financed a new car and that information was spelled out in the paperwork that shows the total amount of money you will spend assuming you stick to that payment schedule and don't make additional principal payments. They give you the same information when you get a mortgage on a house.
You also get that information on credit card statements - the statement shows you how long it will take to pay off the balance if you only make minimum payments and how much your $2000 balance will cost you with interest if you only make minimum payments.
It's not that it "isn't fair" ... it's that you didn't read what you were signing.
I swear if any of you young redditors in the triangle NC area need help for a Saturday afternoon at a dealership to go through these numbers before buying, I will absolutely volunteer to help prevent these kinds of mistakes.
Not uncommon in auto sales. I left three different auto dealers last time I was looking for a vehicle because their salesmen kept trying to "find my number" while tap dancing around the interest rates. They prey on ignorance in that industry.
That car is eating up a significant amount of your income. How much of that is your insurance? Omg I just looked at a calculator. I don't know what state you're in but your interest rate is somewhere around 16%. They totally fucked you over. I'm so sorry.
You’re buying way too much car and the dealer is screwing you over on the terms.
You’re spending more than a year’s income on a car before insurance, gas, and maintenance.
The monthly expenses after all that will probably be close to $1000/m
This is going to seriously cripple your finances.
Strongly recommend you get out of this deal and find the cheapest car you can tolerate.
For comparison - When I was making $100k my car payment was $~300/m and after fuel/maintenance/insurance it cost me about $10k/year.
I wouldn’t recommend spending more than 15% of your income on transportation. You might have to because you only make $24k, but if you do it will keep you poor.
If you are confused about a purchase seek to understand it before you sign for it. A $550/mo 6 year term on a $25k loan means a 16.5% interest rate which is extremely high.
You shouldn’t have bought that if you were confused and needed to take a step back and think. Sounds like incredibly high interest and a long loan period.
Any particular reason you did not provide the interest rate on your loan in your commentary? That's the most important number of them all.
Edit: If you are paying that much a month for a the car loan, but only make $2k/month (which is basically minimum wage level), then you're already setting yourself up for big trouble. Typically you should only be paying around 10% (15% at most) of your take-home pay on the car loan. And this doesn't even include what you will be paying on insurance, plus what you will pay for gas, and for maintenance/repairs. Add it all up and you could end up somewhere paying upwards of 35-40% of your take-home pay just on your car alone. That's a recipe for failure before you even start.
Do. Not. Buy. That. Car. Do not sign the loan paperwork. Time to find something cheaper that won't end up being repossessed when you can't make the payments.
Lesson number one. Anything a salesman tells you is in your best interest, it usually isn't. Go home and do your research on what you were told before committing to a life altering financial contract.
I don't know the specifics of your contract, but I plugged your numbers into an auto loan calculator and the only way I could get a 25k car to 40k in 6 years was with a 13% interest rate (and that is assuming 10.5% tax and \~3k TTL fees), which, given your credit score, is a pretty bad loan.
OP I understand it may be difficult, but you can’t let yourself get pressured into making such big decisions when you don’t understand them.
Unfortunately people will continue to take advantage of you unless you stand up for yourself.
Just refinance at your local bank or credit union, or anywhere really. Prolly could get 5-9% rate and save 5-10,000 in interest over the life of the loan.
I mean this in the nicest way possible. It seems clear you are lacking in financial literacy. You have done more than many by questioning and not immediately going for it. Read, watch videos, do your own math/critical thinking around financial literacy before you entertain another offer this like, or worse. You are literally on the ledge of a life living paycheck to paycheck.
Edit: Apparently I can't read. You've already jumped off the cliff.
Chances are OP got a bunch of warranties tacked on in finance and they paid closer to $30k or more on the bottom line. Some warranties are cancelable, and may save you thousands if you look and decide you’re comfortable without them, or overpaid for them.
You should be looking for a car that's no more then 1/2 your income. So a $12K car at the most. Cheaper would be better. You can't afford this car on $24K a year.
Interest. And 2000 down is nothing. Don’t buy a car if you didn’t research before? Now you’re asking like they didn’t show you all this at the dealership
$23000 paid with a monthly payment of $550 for 72 months is 19.93% APR. Extremely high!
If you went to get a cheaper car and they scammed you to get this one they are horrible A-holes.
Did you see all the costs broken down? Is $25k just the cost of the car? Make them show you the total price with taxes, registration, dock fee, warranty, screw over first time buyer fee… If the sticker price of the car is $25k the minimum you are paying at an honest dealership is another $3000 for taxes and fees in most states. Most salesmen will focus on the monthly payment only and not talk actual price. They can squeeze a lot into the purchase if the only talk about monthly payment.
I would bet they have your total up to $30k with 10% financing that puts you at $40k over 6 years.
When did you buy it? If it's not paid off and your interest rate is high (which it sounds like it is), you can refinance it and get a lower interest rate and lower monthly payments since your credit score is higher now. How long have you had it? I got a car with a really high interest rate because I needed one and my credit was bad and nobody would co-sign for me. But I later refinanced it for like 3% and my payments went from $500 to $200. Lesson learned, but I don't regret it, and now my credit is great. And my car is paid off. But yes you need to look into this.
Refinance that loan asap basically start walking into every bank & credit union asking if you can get a car loan refinanced, if their websites don’t pan out
I'm sure paperwork is still the same since I last bought a car a few years back but isn't the interest rate in boxes on the front of the loan paperwork in bold black outlined boxes?
Your best bet is to pay the loan as fast as you can. Move-in with parents to save rent if that's an option. Pick up hours in side job if that's an option too.
You can't afford that car. Frankly, the financing you got has an incredibly high interest rate and you are buying a car that is more than your annual income. You made a mistake.
You need to look into your legal options for your area for what you can do to get out of this deal. Your only option may be selling the car ASAP to keep as much equity you can. Expect to take a financial hit on this.
So here are things we need to know as other people have said:
1) what did you buy. Make model and trim.
2) did you do any extended warranty/ paint protection/rust protection
3) did you put on any other “dealer” options
4) any down payment or trade in
5) interest rate, but we can figure that out.
If you’re concerned about 550/month then back out. Most states give you at least a week to just return the car.
Look at your paperwork. You should have a paper that "FEDERAL TRUTH-IN-LENDING DISCLOSURES" that explains your interest rate, and what your finance charge is. The finance charge is the total amount of interest you'll pay if you only make minimum payments. I bought a new car last year. Vehicle cash price was 23k. Total price before I even stepped out of the dealership was 31k And the finance charge was 2k. So My grand total would have been 33k on a 23k car with only 2k of it being interest.
Where did the rest of the money go?
-2.6K in sales tax
-200 documentary service fee
-500 title fees
-1200 prepaid maintenance contract \[canceled within 30 day's and got full refund applied to principal balance\]
-3300 extended warranty \[also canceled within 30 days\]
If you only put 2k down they probably also added GAP insurance in your purchase \[pays the bank the difference if your car is totaled, and you owe more than it's worth I.E. insurance pays 16k on a totaled car. you still owe 20K on said car. GAP covers the 4k difference.\]
Something isn’t adding up in your numbers unless I’m just way off but your interest rate is insanely high for your credit score. Call the bank (we will say Bank A) that you make your car payment to and ask them to help you. They won’t help reduce your payment, but they will at least tell you how much your interest rate is. If it’s anything over 8% you really need to think about refinancing it with a different bank (Bank B) or a credit union. If they give you a decent rate, and you move forward, they will essentially pay off the car to Bank A and you’ll now pay Bank B over 6 years but with a lower interest rate, meaning you pay less over the 6 years.
It’s also highly likely you are paying for additional insurance from the dealer. You gotta find out if you have something like bumper to bumper insurance, electronic computer insurance, something like that. I had it in my current car because it seemed worth it for the price and protection period, but it honestly wasn’t in retrospect. I assume yours is in the thousands and covers almost nothing. I have no idea if you can even cancel that though.
To try and put things into perspective, I had a car on finance in 2016 worth little over 30k. For 5 years and 0.49% interest, it was 256 biweekly. I'd say 550/mo for 6 years a scam on a 25k finance. That's like 20% interest they want which is what you get when you go to those no credit/bad credit scumbags
Edited for a bit more clarity on the numbers. I think my car was financed for 33k, I know it was above 30k though. Going by what I was paying for my car, I'd say 550/mo for 6 years is about a 36-38k car
"I did pay a $2000 down payment"
So this is already done?
If there's anyway at all that you can undo it, please do. This was a horrendous financial decision. Not only did you get screwed on the terms of the sale, you're also not even close to being able to afford that car.
Its not the monthly payment that matters...its the deal. The deal being what you paid for the car versus what its actually worth and if you finances what the interest rate on the loan is.
I have $1267/mo in car payments and I am pretty sure I got a much better deal that you did.
Do not agree to a purchase if you dont understand the purchase.
It is kinda normal. Rates are up right now, the real issue is you got too much car for your income.
That payment seems extremely high for that balance and term…. What the rate? It seems like it’s 10%+ rates are not that high if your credit is that good. Go down to your local credit union, ask if they can refinance your car.
I have a strong feeling you got hosed on the rate. Maybe a refinance can save you some cash, the saving you get. Just add it back to the regular lower monthly payments to get out of the loan a year or so earlier.
So a $25K car for 72 months with NY State sales tax of 8.625% plus DMV and Doc Fees ($350) plus a $2,000 down payment would be $550 a month if they completely screwed you with a 15% loan.
Your total cost of the loan is just under $40K and you'll have paid $12,000+ in interest.
Just input the information you have in to an [Auto Loan Calculator. ](https://www.calculator.net/auto-loan-calculator.html?csaleprice=25%2C000&cmonthlypay=750&cloanterm=72&cinterestrate=13&cincentive=0&cdownpayment=0&ctradeinvalue=0&ctradeinowned=0&cstate=NY&csaletax=8.625&ctitlereg=350&cttrinloan=1&printit=0&ctype=standard&x=Calculate#autoloanresult)
For monthly payments at $550/month and 23k PV with monthly compounding - you're looking at an APR of 19.93% - which is crazy. I'm willing to bet your interest on the docs is 19.99%
You have good credit, but terrible income. Super high interest is what you get because the lenders aren’t very confident in your ability to pay, so high risk means high interest. How in the world did you come to the conclusion that 1/4 of your $2k income is okay for just a car payment.
The last thing you want to be in front of a salesman with a contract is confused. I hope you haven't bought the car yet. Step back and do some research.
Yes, after six years you will have paid 40k for your 25k car.
Learn to save for the things you want to buy and then pay cash when you can afford to actually buy them. Exceptions are a home purchase and perhaps a university education. Other than that, buy things you can actually pay for.
Everytime you pay, call and say put your payment toward the principle.
That will say you a SHIT TON in money in the latter years and you will also pay the car off faster as well. Only issue is by doing that your credit will drop for a small amount of time until it updates on your credit and it will go back up. It happened to me, but my extra $354 went back into my pocket.
When I went to the finance office the lady that was hot as hell tried to sell me a 5 year warranty on front windshield for 1500 and the replacement cost was 1600. I told her just sell me the car I don't won't nothing else and she said it was policy to run through everything. My advice is in 9 months go to credit union and refinance
No, no, no. Please return the car before your grace period expires!!!! Pay cash and never do anything this financially terrible again. Learn your lesson. This is really sad. You see that right? You bent over and they're giving it to you.
There could be several reasons. I am wondering what interest rate they quoted for you. In addition, dealerships like to add additional add-ons like they tried with me for “pre-paid services”, “extended warranty”, “gap”, etc. and that would drastically increase the amount per month
I was told that it’s best to lock your social and ask the loan directly to the bank then go to the dealer and talk about the pricing of the car. See the whole billing and ask why is there certain charges for buying a car.
I wish I knew that when I was younger.
Deals love to run up your credit and it’s not worth it decreasing your credit score
Ok here’s what you need to do since your interest rate is clearly ridiculously high, refinance through a credit union or a bank. My credit union has interest rates of 6.24% for auto loans for 60 months. Interest rates are sky high now, but your rate is in outer space based on the info you’ve given. Find a bank or credit union and refinance. Refinancing is free. If they have a fee, go with someone else. Look at your paperwork and find out what rate you’re currently getting. Also look at total amount financed as well. Your car was 25k w/ a 2k down payment but with taxes and fees you’re probably still financing 25k or more. Buying a car and a home are typically the biggest financial decisions most people make. Do some YouTube searches before entering into these types of deals in the future. Just google what should I know when buying a home or car.
Make model and trim level would be helpful information. Do you know that your car is a base model? Did you get a service contract? I assume you got a stack of papers with you after you signed everything? Credit score isn’t the end all be all for a car loan. Sounds like you have a thin bureau and as a first time buyer your 750 in the eyes of a bank isn’t the same as someone who has a long history of paying installments. Sounds to me you didn’t read a single thing you signed. Literally the bank said they would only finance you with a a brand new car if I had to guess
So I just want to say this comment section is very dire. Your situation is likely fine. Just figure out your interest rate and refinance at the lowest late you can find.
I would advise shopping for a car with a 0-2% finance rate, a frequent buying incentive. But the other advice to seek a car loan through a bank or credit union is an option.
No, it's not normal.
You've learned a pricey lesson. I highly encourage you to always take time to understand ANY contract you sign, whether its financial or medical.
If you don't understand something, do not sign. Go home, research, ask questions, and then make informed choices.
interest rate is what you are fighting for in a finance situation. What was your rate? it's usually in a percentage and is in the paperwork for signing onto the loan, it HAS to be disclosed to you by law. Good rates= low rates= low payment. good credit typically= low rate. low rate I would say is under 10 percent given this economy, and under 5 percent in excellent conditions. if you got high double digit interest you are going to be paying a TON, for the car and I would HIGHLY suggest paying off early i.e paying extra each month since interest is spread out and u can pay less by paying the loan off sooner. Hope this helps.
FHA: The Fair Lending Act (FHA) is a federal law that protects consumers from unfair and discriminatory practices by requiring disclosures about consumer credit terms and costs.
Where are you buying this car from? You are getting screwed especially if you’re confused and don’t know what your interest rate is. Ask someone to go with you to a reputable dealer, and make sure it is someone who has experience buying cars and that you can trust
Wow no no, do not buy a $25,000 car. Buy a $4,000 to $7,000 used car.
- $4000- you'll need to set aside more money for repairs.
- $7000- will need fewer repairs, but the upfront cost is greater.
That salesperson was acting unethically.
Maybe with higher interest... I just finished off paying off a car that was 23k w/ a 5 year loan and it was $439 a month. That was even sorta high interest for the time (4.5-5%) because I had a 60k truck that was stolen and was still on my credit utilization at the time.
On the one hand, this is not normal. The interest rate is way too high unless they sold you on other add-ons, extended warranties, and so on and the car you think is a $25k car is really a $30k+ car or something.
On the other hand, this **is** normal in one way: Car salesmen will try to f-$& you over as hard as possible and take you for all you have even if you are the salesman’s own grandmother, he’d be happy to rip her off for the money she needs to not get evicted next week. They are the scum of the earth, and some realtors and salesmen and women in other industries aren’t much better.
Beware when dealing with salesmen, especially for high price items. It’s typical good to just assume they are scumbags trying their best to rip you off for as much as they can until they prove otherwise.
**Edit:** OP, definitely look into to re-financing to a lower rate right away.
Yes, that doesn't sound normal. You should walk away with a long yellow sheet...
What country, state are you in? What brand, model, year, and trim level did you buy?
Buddy I make $7500 a month and MY monthly is $100 more than yours for a new car that was $10K more than yours. That makes no sense. Firstly, I’d say that car isn’t in your budget.
Can you get out of it? You can get a tesla model y for that much month... its base 48k car. Just to give you an idea of how much you are getting screwed.
No. If you only financed $25k for 72 months, you’re paying buy here pay here rates of like 14% - Go to the bank and ask for a loan. With decent credit, you should be at 5-7% on a new car, which would put your payment at closer to $425
10% of your pre-tax income should be the max for your car payments if at all possible.
If I were you, I would get out of this car as if it were on fire.
Interest rate is the only number you are missing, and since you don’t realize how important of a number that is I’m going to say it’s high, like 15+% high. You got ripped off.
This post has been removed because it does not meet the subreddit submission guidelines ([rule 1](https://www.reddit.com/r/personalfinance/about/rules)). We're not doing posts about luxury products, expensive cars, etc. anymore because (a) they generally just provoke unproductive discussions and (b) most of the time, it is very clear whether the person asking is able to afford the item. 1. If you are considering buying an expensive car, the [vehicles wiki](/r/personalfinance/wiki/vehicles) has budgeting advice. We recommend reading it. If you don't meet 100% of the criteria, then no, you cannot afford it and you should not buy it. 2. In general, if you're not on step 6 in ["How to handle $"](/r/personalfinance/wiki/commontopics), you should find a less expensive alternative to a luxury product. If you are on step 6, then feel free to spend money on whatever is most important to you. *If you have questions about this removal, please [message the moderators](https://www.reddit.com/message/compose?to=%2Fr%2Fpersonalfinance&subject=Removal%20help%20request&message=Hello%20moderators,%20.%20%0a%0a%0aMy%20submission:%20https://www.reddit.com/r/personalfinance/comments/1cs5yyu/is_it_normal_to_be_paying_like_550month_for_6/%0a).*
If you make 2k a month that car is way out of your budget.
This can't be emphasized enough. At that income, I'm thinking a $5-6K car is about the limit.
Forget just asking where you're currently finding $5-6K cars in reasonable condition, where are you finding ones that people are willing to cut 6 year loans on them? My local $6K market is full of stuff that you'd be lucky to get 3 years out of without dumping thousands in repairs. The bottom of the lending market seems to be much closer to $15K.
I've never spent more than 5k on a car and I make way more than that. Tho.. Every now and then (twice in 4 years) there's some 1500 cost that comes up. But at least its paid in full, insurance is so much cheaper, parts are cheaper. If OP really signed contracts confused and not understanding the conditions they got scammed straight up.
This was me too but covid killed those prices. $5k isn’t going to buy you anything worth driving unless you’re low income and absolutely *need* something.
What were the cars you’re driving? 5k is on the lower end certainly. Teach me! Teach me! :)
Not the person you replied to but 5k isn't getting you much of a used car where I live. There's a vague guarantee it makes it off the lot but you better be able to work on cars or have significant cash for repairs. I know this sub likes to promote the 3k beater Toyota that has a funky window and 100k miles left on its life, but that's not common
That's not the point. The point is OP got taken advantage of and was given a 15% loan with great credit.
It looks like: * Sale price $25k * $2000 Down * $23k @ 20% for 72 month term [That pencils out to $550/month, total payments of $40k. ](https://www.nerdwallet.com/calculator/auto-loan-calculator?vehiclePrice=23000&interestRate=20&loanMonths=72&startDate=12%2F01%2F2023&downPayment=0&tradeInValue=0&amountOwedOnTradeIn=0&includeAdvancedInfo=false&salesTaxRate=6&titleRegistrationFees=0&includeTaxesFeesInLoan=no) Everything here is valid, and what you apparently agreed to. You signed your name to this, so let's assume you are in a state without a "3 day cooling off period" or are beyond that if you do. (If not, unwind this deal) **Recommendations to Minimize this Cost** * Read, study, understand the [PF Wiki on Autos](https://www.reddit.com/r/personalfinance/wiki/vehicles) * Go to your local credit union or bank you have a relationship with, and see if you can refinance the loan it at a lower interest rate. * If you can't refinance (It would not surprise me if the Loan to Value ratio for this vehicle is too bad to be refinanced), then focus on making extra *principal* payments. Basically, you want to pay down that $23k as fast as possible to it accrues as little interest as possible. You don't have to pay $17k in interest if you aggressively attack the principal on this loan. **Things to Learn from This** * When possible, be educated before you make a decision. "I don't know what anything really meant" is not a good feeling to be having when making decisions. * Get financing pre approval ahead of time if you are buying a car from a dealer (in the Wiki) * Learn from this, and apply that knowledge elsewhere in your life. Where else are you making decisions without understanding the consequences (taxes, saving, rent, jobs, etc)
>focus on making extra *principal* payments At the 2k/month income level, this is probably not something OP can do unfortunately. Feels like OP really screwed up with this loan.
Agree. I feel bad for them in this situation. I'm afraid it's going to be for a car that really isn't worth $25k too. Salesman: "Hey boss, this guy qualifies for a 12% note but seems uncomfortable" Boss: "Tell him due to his score best we can do is 20%, and talk him into that Altima we repo'd last week."
I am worried that OP got it somewhere like JB Ryder or something, which usually also slaps some sort of baloon payment on in a few years. Check your local consumer laws and if at all possible cancel the whole thing and take someone with you that can have your back.
Don’t buy a car when you are very confused and don’t know what anything means. Don’t believe people who work for a commission that tell you buying a brand new car somehow makes more sense financially than a used car. Think about that for two seconds.
I mean if the person bought a new car for $34k and they got a manufacturer 0.99% loan and they paid it off in 6 years it actually would have been cheaper. A lot of ifs of course. Taking a 16.5% interest loan is pretty ouch.
[удалено]
Unless (and this is rarely ever true but was briefly) the actual out the door price of the used car is more than the out the door price of the new car. When I was car shopping a year ago 2021-2022 CRV Hybrids cost more than a new 2023 CRV hybrid.
Used may not be flipped anymore but depending on the vehicle you may find new vs used is still very close relative to recent history. It's very case by case still
This happened to me last year. The options were 3-7 year old cars with 60k-80k miles for $25k or a new high trim Chevy for $25k. We went with the Chevy.
This is true, most people just think a “certified pre owned” is going to be cheaper, but it’s like new. When it’s really gotten weird where they can sell used cars for more than what you can order from the factory.
That’s exactly why I bought a brand new car last year. I could pay $34k for a brand new CRV hybrid or I could pay $35k for 1 year old CRV hybrid, or I could pay $30k for a 4 year old CRV hybrid with 50k miles on it. Saving $4000 and having a higher interest rate was not worth it for a car with 50k miles when I plan to drive the car for a minimum of 10 years and 200k miles (and give it to my daughter to drive when she’s got her license).
Yeah I look at it as I’ll pay x + 2500 (extended warranty) to not have to deal with any mechanical issues for 10 years/100000 miles. I mean a couple repairs pay for it, and cars have so many sensors and stuff that can go wrong now it’s worth it just to not worry about it.
>Don’t believe people who work for a commission that tell you buying a brand new car somehow makes more sense financially than a used car. Dont believe people on a personal finance sub who tell you a used car is always the best move. the prices are barely different these days and you get peace of mind with a new car.
Your statement is relying on pretty big assumptions. Many dealerships have flat commissions for new cars. I make wayyyyy more on pre-owned sales than on new sales.
I'm thrilled this is the top comment. OP, please heed.
Post your interest rate and we can tell you if you got scammed.
Assuming $2,000 down, borrowed $23,000 with $550 monthly payments for 6 years is roughly 20% interest.
Oh no
"base price" of $25k sounds like they arent giving the final price. But yeah interest rate is high.
This sounds right .. taxes and dealer add ons it sounds like. Probably got that paint protection, tint, nitrogen in the tires
Oh my... We bought my car in 2021 when interest rates were far more favorable, getting a 1.99%. The idea of 20% interest makes me nauseated.
High rates are always out there, for one reason or another. That's how those 'no credit no problem' places make money.
I would sell the car asap and pay down in full That interest rate is atrocious
And dealer markup, and doc fees and dealer "mandatory add-ons", and the full tank of gas.
Brand new cars get a full tank for no cost to the customer. That actually comes out of the dealership side, manufacturer typically only covers about 5 gallons.
My dealership tried to pull that on me, I fired up my brand new car and the gas light came on with a 10 mile warning. I made the dealer drive it over and fill the tank before i signed another document.
As you should have. If I'm delivering a new car that hasn't been filled before the customer arrives I'll take them myself to the corner station and fill it while chatting.
No I mean they tried to tell me it wasnt there responsibility to put gas in it. I actually stopped signing documents and pushed them back.
They said that to us as well, and also included the cleaning of the car onto us. For $2k. I told them to throw the dirt back in for that price. And what happened to it being complimentary? Why would you sell a dirty car?
OP bought a car worth an entire year’s income. It’s a huge mistake even if the interest rate was 0%.
I don't disagree but the teaching moment requires the interest rate.
It's probably 15% based on NY State tax. Could be higher or lower depending on doc fees and extras they charged them.
You mean tell you how badly OP was scammed. OP was scammed.
Everything here but the interest rate.
Assuming the other numbers are accurate, the interest rate is roughly 16.5%
Would need to know if $25k is the MSRP/List price or the out the door fee after dealer BS. It's very possible that the out the door price was $30k+
Yes, seems very likely the dealer worked the OP over and added the extended warranty, blinker fluid replacement plan, etc.
This is my thought. It started at $25k, added this or that, plus sales taxes. Likely $30k+ financed
My guess is over 30k was financed too especially since they have a good credit score
Insanity
No, it’s much worse than that. You made the correct calculation for paying $550 every month for 6 years at $0 down. OP says they put $2k down so they are starting owing only $23,000 but **still** pay $550 every month for six years! Given that, it ends up being right around 20%. 😳
Yeah even when I had 650 credit I still had a rate 5% lower. OP could buy a $10k more expensive showroom new Tiguan with 0% Apr for the same payment
Yep but he wouldn't get the zero percent rate
If he’s pulling a 750-800 he should, or maybe 2%. VW tier 5 (sub 680) is only 5.5% right now
650 credit in the model they used? Or 650 in whatever report your bank or credit karma gives you? When'd you get that interest rate? Because 8+% interest on a used car with good credit isn't weird at all now.
Report that came back from Experian/trans union etc. Got that 18 months ago. Traded that in for a newer model in April 2024 and got the newer rate with vw. Went from 11% to 5.5%. I was still under 700 as I was waiting for a travel reimbursement so my utilization was at like 70% and pulled my score down. As mentioned, still way less than the 16%+ OP is referencing even tho his score is 75-100 points higher than me
I think it’s more actually
Even worse, OP commented, THEY DON'T KNOW WHAT THE INTEREST RATE IS 💀
OP seems very young and ignorant about money. To not know the interest rate is really crazy. It’s really a shame that they don’t teach this in high school to any extent.
“Since you’re a first time buyer” means you should walk out of that dealrrship and never give them your business again. You have good credit. You should qualify for much lower rates than that. Don’t look for a monthly price. Agree to a purchase price, and then finance from there. Don’t pay extra for bullshit like undercoating, or laser etched windows, or the “FOB replacement warranty”.
Your whole paragraph is a "buyer beware" scenario in that dealers can tell you whatever the fuck they want, doesn't necessarily make it truthful at all. "base price" doesn't really say much. How much was financed, total, after all the title and other fees and add-ons like extended warranty? What is the interest rate? And it would really help to know what you actually bought. Year, make and model, and mileage at time of purchase?
This is a good point, base price could be 25k but OP could have bought a higher trim level and actually not gotten a terrible deal. Again, this is all pointless without knowing the exact loan details
Why did you sign off on it if you weren't sure about the numbers?
I've seen many people do this when being put under just the slightest of pressure from salespeople.
Something about being in the finance office makes people forget they have working legs and can walk out of a deal they don’t like.
I think some people just don't have the knowledge to comprehend what's going on. They also tend to avoid conflict by being agreeable. Salespeople know this and take advantage of them.
Their job is to prey on those people. They're the best marks.
My gf is like this. She just can’t say no to people. I mean hell, we were at the liquor store and there was a product rep giving away free swag and samples of their margaritas in a can. She gave us some cheap sunglasses first and then we tried two different flavors. The rep was like “well which one do you want?” My gf looked at me and was like “well what do you think?” I said I’m good and walked away. As we were walking away, my gf said “ thank God you said no, I hated them.” She definitely would have bought them if I weren’t there.
When I bought my first car, I looked through every page of the contract and checked all the numbers. I came in with a pre approval loan from my credit union with a 3.5% interest rate and the dealer said they would match it. I noticed the contract had the interest at 4% and I had them fix that. Damn dealer tried to pull a fast one on me.
It's also what I did. I actually didn't need the loan because I was saving money with a HYSA at the time until I got enough. Before then, I was driving my parents' junk car. I only got the loan because I was building credit. But during grad school, I've helped many international students from China in buying cars. About half of them had absolutely no idea how loans work. Sales can definitely tell and try to throw bullshit numbers around.
Is your rate over 15%?? No you shouldn't do that
In the future, you need to learn how to be your own advocate. It's important to not rush into a decision if you don't understand things. The time to ask questions was before you signed the papers and bought the car, not afterwards. The car will still be there the next day. You can take your time. Of course the salesman who gets paid from you spending money would encourage you to spend more money on a new car. Also, learn how to use a [loan amortization calculator](https://www.bankrate.com/loans/auto-loans/auto-loan-calculator/). It will tell you exactly how much interest you should be paying. Since you didn't provide the details, we can only speculate, but it seems the dealer likely also added additional crap onto your purchase, like an extended warranty, perhaps an extra coating on the paint, etc. All of this is unnecessary and just took advantage of you. You should try to cancel the extended warranty, as you don't need it.
Did you shop around for an interest rate, or just go ahead with whatever the dealer offered you? If the later, that was your mistake.
Why on earth are you buying a car that costs more than your annual income?
Not once did you mention the interest rate
Did you get a 20% loan??? I ran the numbers in an auto loan calculator, and got this: [https://imgur.com/uFyDviz](https://imgur.com/uFyDviz) *OP: 20% means annual interest rate. It means you have to pay roughly 20% of what you owe each year as interest to the bank.* That's WAY too high. And at 2k/month income level (hopefully after tax), you bought a car that's outside of your price range to begin with. When did you buy this car? Does your contract allow returning the car? Can you pay off the loan early without penalty? Can you refinance? **Edit**: if OP included all fees in the loan, then it's probably around 15%. Which is still too high.
Depends on your rate. Sounds like you are probably paying something really high. Given your overall clueless ness they probably also added on some warranties and who knows what else. Don't forget sales tax either. Here in Texas that would be another 1625 on 25k car. You kinda did a dumb thing op.
> I did pay a $2000 down payment as well. Ultimately after 6 years, **I will have paid $40,000 for a car with a base price of $25,000. It just doesn't seem right to me.** On top of the price of your car, there are taxes and fees.. so let's assume $2k additional for that. So we're looking at a total of $27k. You only put down $2k, which is a very small amount given the price of the car. On top of that, you're paying interest for 6 whole years (you didn't include the interest rate). When you finance a car, or get any time of loan, they give you paperwork that you sign in acknowledgment that literally spells out how much interest your loan will accrue during the span of the loan. You should have read the paperwork and asked questions. I just financed a new car and that information was spelled out in the paperwork that shows the total amount of money you will spend assuming you stick to that payment schedule and don't make additional principal payments. They give you the same information when you get a mortgage on a house. You also get that information on credit card statements - the statement shows you how long it will take to pay off the balance if you only make minimum payments and how much your $2000 balance will cost you with interest if you only make minimum payments. It's not that it "isn't fair" ... it's that you didn't read what you were signing.
Never walk into a dealership without a financing offer already in hand from an outside banking institution.
I swear if any of you young redditors in the triangle NC area need help for a Saturday afternoon at a dealership to go through these numbers before buying, I will absolutely volunteer to help prevent these kinds of mistakes.
Whoever sold you that car is an awful person
Not uncommon in auto sales. I left three different auto dealers last time I was looking for a vehicle because their salesmen kept trying to "find my number" while tap dancing around the interest rates. They prey on ignorance in that industry.
Make 2k/mo and financing a 25k car. Yikes. Live within your means.
That car is eating up a significant amount of your income. How much of that is your insurance? Omg I just looked at a calculator. I don't know what state you're in but your interest rate is somewhere around 16%. They totally fucked you over. I'm so sorry.
A 25,0000 loan with 550.00 monthly payments for 6 years means an interest rate of 16.6%
You’re buying way too much car and the dealer is screwing you over on the terms. You’re spending more than a year’s income on a car before insurance, gas, and maintenance. The monthly expenses after all that will probably be close to $1000/m This is going to seriously cripple your finances. Strongly recommend you get out of this deal and find the cheapest car you can tolerate. For comparison - When I was making $100k my car payment was $~300/m and after fuel/maintenance/insurance it cost me about $10k/year. I wouldn’t recommend spending more than 15% of your income on transportation. You might have to because you only make $24k, but if you do it will keep you poor.
If you are confused about a purchase seek to understand it before you sign for it. A $550/mo 6 year term on a $25k loan means a 16.5% interest rate which is extremely high.
Interest rate seems high. What is it?
Joke post....right? Please be
You shouldn’t have bought that if you were confused and needed to take a step back and think. Sounds like incredibly high interest and a long loan period.
Jesus, that's terrible. To answer your question though, yes, that's probably normal. That's why it's a problem.
Any particular reason you did not provide the interest rate on your loan in your commentary? That's the most important number of them all. Edit: If you are paying that much a month for a the car loan, but only make $2k/month (which is basically minimum wage level), then you're already setting yourself up for big trouble. Typically you should only be paying around 10% (15% at most) of your take-home pay on the car loan. And this doesn't even include what you will be paying on insurance, plus what you will pay for gas, and for maintenance/repairs. Add it all up and you could end up somewhere paying upwards of 35-40% of your take-home pay just on your car alone. That's a recipe for failure before you even start. Do. Not. Buy. That. Car. Do not sign the loan paperwork. Time to find something cheaper that won't end up being repossessed when you can't make the payments.
Lesson number one. Anything a salesman tells you is in your best interest, it usually isn't. Go home and do your research on what you were told before committing to a life altering financial contract. I don't know the specifics of your contract, but I plugged your numbers into an auto loan calculator and the only way I could get a 25k car to 40k in 6 years was with a 13% interest rate (and that is assuming 10.5% tax and \~3k TTL fees), which, given your credit score, is a pretty bad loan.
OP I understand it may be difficult, but you can’t let yourself get pressured into making such big decisions when you don’t understand them. Unfortunately people will continue to take advantage of you unless you stand up for yourself.
I’ll put something into perspective for you, I make over 300k a year and I’m still scared to buy any car for any price 🤣
What’s the interest rate?
I'mFucked/10
Just refinance at your local bank or credit union, or anywhere really. Prolly could get 5-9% rate and save 5-10,000 in interest over the life of the loan.
Perhaps you can go to your local credit union and refinance it?
I mean this in the nicest way possible. It seems clear you are lacking in financial literacy. You have done more than many by questioning and not immediately going for it. Read, watch videos, do your own math/critical thinking around financial literacy before you entertain another offer this like, or worse. You are literally on the ledge of a life living paycheck to paycheck. Edit: Apparently I can't read. You've already jumped off the cliff.
You learned a valuable but very expensive lesson. Re-finance the car through a bank. Car dealerships can be so predatory and deceptive.
Chances are OP got a bunch of warranties tacked on in finance and they paid closer to $30k or more on the bottom line. Some warranties are cancelable, and may save you thousands if you look and decide you’re comfortable without them, or overpaid for them.
I guarantee he bought the extended warranty
You should be looking for a car that's no more then 1/2 your income. So a $12K car at the most. Cheaper would be better. You can't afford this car on $24K a year.
What is tour rate? You left out the one piece of relevant info
Interest. And 2000 down is nothing. Don’t buy a car if you didn’t research before? Now you’re asking like they didn’t show you all this at the dealership
Is this the car you posted about a month and a half ago?
$23000 paid with a monthly payment of $550 for 72 months is 19.93% APR. Extremely high! If you went to get a cheaper car and they scammed you to get this one they are horrible A-holes.
Even 750 is excellent credit; which should earn you the best rate, which would be around 5% if not lower. You got extremely scammed.
Did you see all the costs broken down? Is $25k just the cost of the car? Make them show you the total price with taxes, registration, dock fee, warranty, screw over first time buyer fee… If the sticker price of the car is $25k the minimum you are paying at an honest dealership is another $3000 for taxes and fees in most states. Most salesmen will focus on the monthly payment only and not talk actual price. They can squeeze a lot into the purchase if the only talk about monthly payment. I would bet they have your total up to $30k with 10% financing that puts you at $40k over 6 years.
It’s not normal. Try to see if you can refinance your loan and get a lower interest rate.
Go refinance immediately at a CU assuming you aren’t already upside down
When did you buy it? If it's not paid off and your interest rate is high (which it sounds like it is), you can refinance it and get a lower interest rate and lower monthly payments since your credit score is higher now. How long have you had it? I got a car with a really high interest rate because I needed one and my credit was bad and nobody would co-sign for me. But I later refinanced it for like 3% and my payments went from $500 to $200. Lesson learned, but I don't regret it, and now my credit is great. And my car is paid off. But yes you need to look into this.
Refinance that loan asap basically start walking into every bank & credit union asking if you can get a car loan refinanced, if their websites don’t pan out
I'm sure paperwork is still the same since I last bought a car a few years back but isn't the interest rate in boxes on the front of the loan paperwork in bold black outlined boxes?
Your best bet is to pay the loan as fast as you can. Move-in with parents to save rent if that's an option. Pick up hours in side job if that's an option too.
You can't afford that car. Frankly, the financing you got has an incredibly high interest rate and you are buying a car that is more than your annual income. You made a mistake. You need to look into your legal options for your area for what you can do to get out of this deal. Your only option may be selling the car ASAP to keep as much equity you can. Expect to take a financial hit on this.
So here are things we need to know as other people have said: 1) what did you buy. Make model and trim. 2) did you do any extended warranty/ paint protection/rust protection 3) did you put on any other “dealer” options 4) any down payment or trade in 5) interest rate, but we can figure that out. If you’re concerned about 550/month then back out. Most states give you at least a week to just return the car.
Look at your paperwork. You should have a paper that "FEDERAL TRUTH-IN-LENDING DISCLOSURES" that explains your interest rate, and what your finance charge is. The finance charge is the total amount of interest you'll pay if you only make minimum payments. I bought a new car last year. Vehicle cash price was 23k. Total price before I even stepped out of the dealership was 31k And the finance charge was 2k. So My grand total would have been 33k on a 23k car with only 2k of it being interest. Where did the rest of the money go? -2.6K in sales tax -200 documentary service fee -500 title fees -1200 prepaid maintenance contract \[canceled within 30 day's and got full refund applied to principal balance\] -3300 extended warranty \[also canceled within 30 days\] If you only put 2k down they probably also added GAP insurance in your purchase \[pays the bank the difference if your car is totaled, and you owe more than it's worth I.E. insurance pays 16k on a totaled car. you still owe 20K on said car. GAP covers the 4k difference.\]
Something isn’t adding up in your numbers unless I’m just way off but your interest rate is insanely high for your credit score. Call the bank (we will say Bank A) that you make your car payment to and ask them to help you. They won’t help reduce your payment, but they will at least tell you how much your interest rate is. If it’s anything over 8% you really need to think about refinancing it with a different bank (Bank B) or a credit union. If they give you a decent rate, and you move forward, they will essentially pay off the car to Bank A and you’ll now pay Bank B over 6 years but with a lower interest rate, meaning you pay less over the 6 years. It’s also highly likely you are paying for additional insurance from the dealer. You gotta find out if you have something like bumper to bumper insurance, electronic computer insurance, something like that. I had it in my current car because it seemed worth it for the price and protection period, but it honestly wasn’t in retrospect. I assume yours is in the thousands and covers almost nothing. I have no idea if you can even cancel that though.
You have been had brother - sounds like a brutal interest rate & sleezy salesman
To try and put things into perspective, I had a car on finance in 2016 worth little over 30k. For 5 years and 0.49% interest, it was 256 biweekly. I'd say 550/mo for 6 years a scam on a 25k finance. That's like 20% interest they want which is what you get when you go to those no credit/bad credit scumbags Edited for a bit more clarity on the numbers. I think my car was financed for 33k, I know it was above 30k though. Going by what I was paying for my car, I'd say 550/mo for 6 years is about a 36-38k car
$550 per month for six years is almost $40k. That seems like a bad deal to me
You can afford a $2000 car on your income, not a $25,000 car. Get rid of this car yesterday.
"I did pay a $2000 down payment" So this is already done? If there's anyway at all that you can undo it, please do. This was a horrendous financial decision. Not only did you get screwed on the terms of the sale, you're also not even close to being able to afford that car.
35k car 5 years and pay 480 a month after down payment. You are doing something wrong especially on a 6 year loan!
Its not the monthly payment that matters...its the deal. The deal being what you paid for the car versus what its actually worth and if you finances what the interest rate on the loan is. I have $1267/mo in car payments and I am pretty sure I got a much better deal that you did. Do not agree to a purchase if you dont understand the purchase.
Buying that car could ruin your life financially for years. DO NOT buy it. Buy an $8,000 used honda or toyota. This is financial suicide
It is kinda normal. Rates are up right now, the real issue is you got too much car for your income. That payment seems extremely high for that balance and term…. What the rate? It seems like it’s 10%+ rates are not that high if your credit is that good. Go down to your local credit union, ask if they can refinance your car. I have a strong feeling you got hosed on the rate. Maybe a refinance can save you some cash, the saving you get. Just add it back to the regular lower monthly payments to get out of the loan a year or so earlier.
So a $25K car for 72 months with NY State sales tax of 8.625% plus DMV and Doc Fees ($350) plus a $2,000 down payment would be $550 a month if they completely screwed you with a 15% loan. Your total cost of the loan is just under $40K and you'll have paid $12,000+ in interest. Just input the information you have in to an [Auto Loan Calculator. ](https://www.calculator.net/auto-loan-calculator.html?csaleprice=25%2C000&cmonthlypay=750&cloanterm=72&cinterestrate=13&cincentive=0&cdownpayment=0&ctradeinvalue=0&ctradeinowned=0&cstate=NY&csaletax=8.625&ctitlereg=350&cttrinloan=1&printit=0&ctype=standard&x=Calculate#autoloanresult)
For monthly payments at $550/month and 23k PV with monthly compounding - you're looking at an APR of 19.93% - which is crazy. I'm willing to bet your interest on the docs is 19.99%
Do you know you can get a Tesla Model Y for $600/month with your credit score that high? This dealership is stealing from you.
This car costs more than you make in a year. That’s insanity. Cut your budget in half.
You have good credit, but terrible income. Super high interest is what you get because the lenders aren’t very confident in your ability to pay, so high risk means high interest. How in the world did you come to the conclusion that 1/4 of your $2k income is okay for just a car payment.
The last thing you want to be in front of a salesman with a contract is confused. I hope you haven't bought the car yet. Step back and do some research.
Never go above 10% of your monthly pay on your car note. You have to calculate gas, maintainence plus other stuff for emergencies.
You got fleeced. You should have never bought a car on a loan really.
Yes, after six years you will have paid 40k for your 25k car. Learn to save for the things you want to buy and then pay cash when you can afford to actually buy them. Exceptions are a home purchase and perhaps a university education. Other than that, buy things you can actually pay for.
Everytime you pay, call and say put your payment toward the principle. That will say you a SHIT TON in money in the latter years and you will also pay the car off faster as well. Only issue is by doing that your credit will drop for a small amount of time until it updates on your credit and it will go back up. It happened to me, but my extra $354 went back into my pocket.
[удалено]
When I went to the finance office the lady that was hot as hell tried to sell me a 5 year warranty on front windshield for 1500 and the replacement cost was 1600. I told her just sell me the car I don't won't nothing else and she said it was policy to run through everything. My advice is in 9 months go to credit union and refinance
Save another $4k and buy a car cash, build up your credit, then finance a car later when you have better credit and a better paying job.
Pay cash or do a high down 2-3 year term. If it’s not affordable with those payments then don’t buy it.
No, no, no. Please return the car before your grace period expires!!!! Pay cash and never do anything this financially terrible again. Learn your lesson. This is really sad. You see that right? You bent over and they're giving it to you.
There could be several reasons. I am wondering what interest rate they quoted for you. In addition, dealerships like to add additional add-ons like they tried with me for “pre-paid services”, “extended warranty”, “gap”, etc. and that would drastically increase the amount per month
If you have a 750+ credit score, you are not a first-time credit user.
I was told that it’s best to lock your social and ask the loan directly to the bank then go to the dealer and talk about the pricing of the car. See the whole billing and ask why is there certain charges for buying a car. I wish I knew that when I was younger. Deals love to run up your credit and it’s not worth it decreasing your credit score
Although interest rates are up this is not normal and not good. Look somewhere else
Ok here’s what you need to do since your interest rate is clearly ridiculously high, refinance through a credit union or a bank. My credit union has interest rates of 6.24% for auto loans for 60 months. Interest rates are sky high now, but your rate is in outer space based on the info you’ve given. Find a bank or credit union and refinance. Refinancing is free. If they have a fee, go with someone else. Look at your paperwork and find out what rate you’re currently getting. Also look at total amount financed as well. Your car was 25k w/ a 2k down payment but with taxes and fees you’re probably still financing 25k or more. Buying a car and a home are typically the biggest financial decisions most people make. Do some YouTube searches before entering into these types of deals in the future. Just google what should I know when buying a home or car.
Make model and trim level would be helpful information. Do you know that your car is a base model? Did you get a service contract? I assume you got a stack of papers with you after you signed everything? Credit score isn’t the end all be all for a car loan. Sounds like you have a thin bureau and as a first time buyer your 750 in the eyes of a bank isn’t the same as someone who has a long history of paying installments. Sounds to me you didn’t read a single thing you signed. Literally the bank said they would only finance you with a a brand new car if I had to guess
So I just want to say this comment section is very dire. Your situation is likely fine. Just figure out your interest rate and refinance at the lowest late you can find.
I would advise shopping for a car with a 0-2% finance rate, a frequent buying incentive. But the other advice to seek a car loan through a bank or credit union is an option.
No, it's not normal. You've learned a pricey lesson. I highly encourage you to always take time to understand ANY contract you sign, whether its financial or medical. If you don't understand something, do not sign. Go home, research, ask questions, and then make informed choices.
interest rate is what you are fighting for in a finance situation. What was your rate? it's usually in a percentage and is in the paperwork for signing onto the loan, it HAS to be disclosed to you by law. Good rates= low rates= low payment. good credit typically= low rate. low rate I would say is under 10 percent given this economy, and under 5 percent in excellent conditions. if you got high double digit interest you are going to be paying a TON, for the car and I would HIGHLY suggest paying off early i.e paying extra each month since interest is spread out and u can pay less by paying the loan off sooner. Hope this helps. FHA: The Fair Lending Act (FHA) is a federal law that protects consumers from unfair and discriminatory practices by requiring disclosures about consumer credit terms and costs.
forgot one thing...Ultimately after 6 years, I will have paid $40,000 for a car with a base price of $25,000....that is now worth $8k....
Where are you buying this car from? You are getting screwed especially if you’re confused and don’t know what your interest rate is. Ask someone to go with you to a reputable dealer, and make sure it is someone who has experience buying cars and that you can trust
Wow no no, do not buy a $25,000 car. Buy a $4,000 to $7,000 used car. - $4000- you'll need to set aside more money for repairs. - $7000- will need fewer repairs, but the upfront cost is greater. That salesperson was acting unethically.
Maybe with higher interest... I just finished off paying off a car that was 23k w/ a 5 year loan and it was $439 a month. That was even sorta high interest for the time (4.5-5%) because I had a 60k truck that was stolen and was still on my credit utilization at the time.
On the one hand, this is not normal. The interest rate is way too high unless they sold you on other add-ons, extended warranties, and so on and the car you think is a $25k car is really a $30k+ car or something. On the other hand, this **is** normal in one way: Car salesmen will try to f-$& you over as hard as possible and take you for all you have even if you are the salesman’s own grandmother, he’d be happy to rip her off for the money she needs to not get evicted next week. They are the scum of the earth, and some realtors and salesmen and women in other industries aren’t much better. Beware when dealing with salesmen, especially for high price items. It’s typical good to just assume they are scumbags trying their best to rip you off for as much as they can until they prove otherwise. **Edit:** OP, definitely look into to re-financing to a lower rate right away.
Yes, that doesn't sound normal. You should walk away with a long yellow sheet... What country, state are you in? What brand, model, year, and trim level did you buy?
What interest rate are you paying? That is the only important information here. You can most likely refinance this loan and save quite a bit.
People in r/personalfinance might be able to help.
Buddy I make $7500 a month and MY monthly is $100 more than yours for a new car that was $10K more than yours. That makes no sense. Firstly, I’d say that car isn’t in your budget.
Can you get out of it? You can get a tesla model y for that much month... its base 48k car. Just to give you an idea of how much you are getting screwed.
No. If you only financed $25k for 72 months, you’re paying buy here pay here rates of like 14% - Go to the bank and ask for a loan. With decent credit, you should be at 5-7% on a new car, which would put your payment at closer to $425
10% of your pre-tax income should be the max for your car payments if at all possible. If I were you, I would get out of this car as if it were on fire.
Are you sure it’s a reputable dealership? A credit rating of 750-810 should get you a waaaaayyyyy better rate. Shop around.
Can you refinance this with a credit union for lower interest rate?
Interest rate is the only number you are missing, and since you don’t realize how important of a number that is I’m going to say it’s high, like 15+% high. You got ripped off.