Amortization??

[stovt001]

Sounds good. Hope it all works out for you. I'd like to know if this is being financed through GMAC.

[westvanGT]

Originally Posted by bumblebee123

Can someone from here explain this to me? I forgot to ask what it means. Basically what's happening is I'll be getting my Camaro next Wednesday. It'll be financing it for 60 mos at $675 per/mo. Now she mentioned something about amortization and balloon payment to go on 96 mo. Can someone help? I can't sleep right now due to im thinking about it. Please dont flame me...

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...

[stovt001]

ah yes, I missed a couple posts up there. I understand now you're refering to the loan officer, and you're working with a Canadian bank. Apparently Canadians have some different loan options compared to Americans. At least, I have never heard of an automotive loan structure like this in the U.S. I'm afraid this is out of my background.

[westvanGT]

Originally Posted by stovt001

ah yes, I missed a couple posts up there. I understand now you're refering to the loan officer, and you're working with a Canadian bank. Apparently Canadians have some different loan options compared to Americans. At least, I have never heard of an automotive loan structure like this in the U.S. I'm afraid this is out of my background.

Yeah its a sneaky way the banks up here make more money off of you. They offer this type of arrangement to a lot of younger/first time car buyers. They buy maybe more car than they can afford because the payments are lowered, but the don't realize how much money they are wasting on interest!

[bumblebee123]

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...

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.

[bumblebee123]

Also just for everyone know, i'm not loaning from the bank, this is GMAC financing.

[Chevyrocker]

Yea, this sounds bad. You can't even structure a loan like this in the US on a car. Basically this is what you will pay if I'm understanding this correctly...

$675 x 60 months = $40,500

Then the final payment will be $675 x 36 (balloon payment) = $24,300

for a grand total of $64,800!!!

Sounds like robbery to me.

[bumblebee123]

Originally Posted by Chevyrocker

Yea, this sounds bad. You can't even structure a loan like this in the US on a car. Basically this is what you will pay if I'm understanding this correctly...

$675 x 60 months = $40,500

Then the final payment will be $675 x 36 (balloon payment) = $24,300

for a grand total of $64,800!!!

Sounds like robbery to me.

It is bad now that I understand.

[The Viz]

what was the sticker price, what model, what interest rate? That equates to approx. $55k US, which is pretty high, but if it's a loaded up 2SS with bad credit it makes sense after finance charges.

[bumblebee123]

Sticker Price is $41,050 and that's Canadian. 7.96% interest rate. & its a 1ss.

[bumblebee123]

Also the problem is, nobody is giving me any formal hard copy of payments and breakdowns and what not. My family just bought a new Toyota Highlander and even though its a lease, it has a breakdown of everything. But this GM just shows me my monthly and that's pretty much it. So, right not chances are I'm going to have to cancel..

[Computerplay]

go to bankrate.com and use a mortgage calculator to get a amortization schedule.

I used $35,000 at 5.85% for 5 years and came up with a payment of $674.21.

According to your numbers, I got a 5 year loan at $831.56 a month?????

[SoloSK71]

If you are in BC, are you a member of VanCity Credit Union? They probably have the easiest way to apply for a vehicle loan I have ever seen.

https://www.vancity.com/Loans/ApplyOnline/

also

https://www.vancity.com/Loans/LoanCa...rs/BuyvsLease/

Otherwise, look at RBC or TD, they have online loan calculators that you can enter the details into to give you an idea of payments.

ex. given numbers you have provided this is what you should see on a 96 month purchase.

• Price ----------------- $41,500.00
• Interest rate --------- 7.96%
• Down payment-------- $5,000.00
• GST & PST or HST ---- $3,112.50
• Loan amount --------- $39,612.50
• Loan payment -------- $559.18

- SK

[Brokinarrow]

Originally Posted by bumblebee123

Can someone from here explain this to me? I forgot to ask what it means. Basically what's happening is I'll be getting my Camaro next Wednesday. It'll be financing it for 60 mos at $675 per/mo. Now she mentioned something about amortization and balloon payment to go on 96 mo. Can someone help? I can't sleep right now due to im thinking about it. Please dont flame me...

I think you'll only have to worry about that if you do a 96 month loan (which is REALLY unheard of for an auto loan). Just calmly ask her to explain everything as simply as she can to ya.