Quote:
Originally Posted by westvanGT
an amortization period of 96 months means that you'll be spreading the total financed cost over 96 equal payments. The total payment per month is fixed, but as you pay your loan the carrying cost goes down, so the portion of the payment that goes to interest goes down each month while the portion that goes towards the principal goes up...
If you're financing it over 60 months that means that you only pay 60 of the 96 payments. If you read your loan agreement it probably says that on the day of your loan you pay your last payment plus you also must pay the 36 remaining payments of your amortiztion period(the 'balloon' payment). At that time you'd either pay the entire balance or re-finance the loan.
This type of loan arrangement is analagous to a mortage: 8 year amortization with a fixed 5 year term. You refinance the mortage after your term is up...
Basically a 96 month loan means you'll be paying a lot interest to the bank, i'd try to get a bigger downpayment saved up or just get the loan amortized over 5 years and bump up your payments. It'll save you thousands of dollars over the time you have the car...
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wow! that's the simplest way someone has put it to me. Just to make sure I understand correctly.
So that means $675 per/mo X 96 months?
Sorry, i'm a little bit slow at this.