Amortization??

[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...

[Vash]

Hum that does not sound right. Fixed APR should be a fixed payment. Are you leasing?

Amortization is basically a loan schedule.

[bumblebee123]

I'm not leasing. I'm buying it.

[stovt001]

Who is "she"? More info here please. I think I can help you with this.

[bumblebee123]

"She" is the one that handles the monthly payment of the car. I forgot her job description.

[Vash]

Originally Posted by bumblebee123

I'm not leasing. I'm buying it.

Well did you read the advice threads on how to buy a Camaro?

Cause you should have a fixed APR loan. There is no balloon payment.

Are you a Credit Union member? What bank is financing this?

[bumblebee123]

I'm not a Credit Union Member. A bank in Canada.

[Vash]

Ah well I have no idea how banks work in Canada maybe someone else could chime in.

96 payments for a balloon? It just sounds messed up.

[bumblebee123]

I was stupid not to ask questions. I was nervous due to its my first car and I was alone. All I know is the monthly rate is 675$ per mo and that's without down payment. I can make it to 619$ if I put 5000 down. I was surprised it was lower than I expected. I'm guessing because of that amortization.

[BlueMarlin]

principle of loan = amount borrowed = camaro cost

amortizing loan = when you use an amortization schedule to pay down the loan

amortization schedule dictates how much each payment is going to go towards the paying the principle and paying the interest (I think in terms of a car loan, this means the amount you pay monthly is subject to change).

To find out how much you will be paying monthly you will be using an amortization calculator. It's much simpler than it sounds, but it's not gonna sound pretty coming off an internet forum when my brain is fried from key west for the past week.

Originally Posted by bumblebee123

I was stupid not to ask questions. I was nervous due to its my first car and I was alone. All I know is the monthly rate is 675$ per mo and that's without down payment. I can make it to 619$ if I put 5000 down. I was surprised it was lower than I expected. I'm guessing because of that amortization.

Ask any questions you have, you need to understand this process. Try not to be nervous and remember if you have a question, just ask it. If you still don't get it, just be upfront and let her know that you need to understand it differently. They are there to facilitate this process, not wig you out. Good luck with this and keep us posted.


I suggest looking at the wall street journal or barron's online to see if they have more information with this in relation to auto loans.

I am a finance and economics double major (and dad used to work for GMAC in lending) but I'm not quite sure if this is accurate for a car loan. Just curious, are you taking out a lien?

[stovt001]

OK, just let us know a few things: who are you buying the car from? Who are you obtaining the financing through? Who is this "she" that you mentioned?

Bottom line, financing a vehicle purchase should be a very simple arrangement. There should not be any complicating factors like "balloon payments". You should have a set principle amount - the amount borrowed, aka purchase price of the vehicle plus all fees, less down payment and trade in - term - which you specified at 60 months - and interest payments based on a fixed interest rate determined by your credit rating and the term of the loan. Your monthly payment should be fixed throughout the life of the loan, paying interest first and the remainder going to principle. Any deviation from this arrangement is highly suspect.

Similar to Blue Marlin, above, I received my degree in business economics, but I majored in Finance for two years before switching and I am beginning a new career in the finance sector. I'm not an expert, but I am somewhat educated on these matters.

[BlueMarlin]

Originally Posted by stovt001

OK, just let us know a few things: who are you buying the car from? Who are you obtaining the financing through? Who is this "she" that you mentioned?

Bottom line, financing a vehicle purchase should be a very simple arrangement. There should not be any complicating factors like "balloon payments". You should have a set principle amount - the amount borrowed, aka purchase price of the vehicle plus all fees, less down payment and trade in - term - which you specified at 60 months - and interest payments based on a fixed interest rate determined by your credit rating and the term of the loan. Your monthly payment should be fixed throughout the life of the loan, paying interest first and the remainder going to principle. Any deviation from this arrangement is highly suspect.

Similar to Blue Marlin, above, I received my degree in business economics, but I majored in Finance for two years before switching and I am beginning a new career in the finance sector. I'm not an expert, but I am somewhat educated on these matters.

Agreed, I don't know why a basic loan would be setup this way, is your credit history iffy or nonexistant? (aka are you young and have not had a house or car mortgage)? To have an amortize loan is usually to manage credit risk.

[bumblebee123]

Originally Posted by BlueMarlin

principle of loan = amount borrowed = camaro cost

amortizing loan = when you use an amortization schedule to pay down the loan

amortization schedule dictates how much each payment is going to go towards the paying the principle and paying the interest (I think in terms of a car loan, this means the amount you pay monthly is subject to change).

To find out how much you will be paying monthly you will be using an amortization calculator. It's much simpler than it sounds, but it's not gonna sound pretty coming off an internet forum when my brain is fried from key west for the past week.



Ask any questions you have, you need to understand this process. Try not to be nervous and remember if you have a question, just ask it. If you still don't get it, just be upfront and let her know that you need to understand it differently. They are there to facilitate this process, not wig you out. Good luck with this and keep us posted.


I suggest looking at the wall street journal or barron's online to see if they have more information with this in relation to auto loans.

I am a finance and economics double major (and dad used to work for GMAC in lending) but I'm not quite sure if this is accurate for a car loan. Just curious, are you taking out a lien?

Thanks for your great advice. I'll call the dealer tomorrow and ask more questions and let you guys know!

[bumblebee123]

Thanks for the replies everyone! I'll phone the dealer tomorrow and ask more questions and let you guys know.