Hey peeps,

Bought an IS350 Fsport back in Jan. 2016... Now, I'm wondering if some math wiz can explain to me how my interested is calculated. It states its annual, but I can't seem to make the math come out right. Maybe I'm just stupid..

Here's some info. I put 30k down, and need to finance 17.5k over 3 years/36 months.

 

Thats a low % apr, i calculated you would pay around 750$ In interest for your 3 year financing term

2.69% = .0269 \ 12 months = .00224(use this number and multiply it by 17,500$ and you would get the $ in interest you pay for that payment that month which is 39$ so you pay 39$ in interest on that monthly amount of 507$ And the difference of 468$ Goes towards principle and remember every month the interest you would be paying would get lower

 

Ohh thanks. In other words, I will end up paying 47,500 total for the car ? or is it 47,500 +750? Sorry, but my math is terrible.

 

[QUOTE=nathantse;9888372]Ohh thanks. In other words, I will end up paying 47,500 total for the car ? or is it 47,500 +750? Sorry, but my math is terrible.

Yup 47,500+ 753(dollars in interest you gonna pay in 3 years total)= would be the total you would pay for the three years.

since your payment is 507.02 a month, you mulitply it by 36 months(3 yr finance period) and you get 18,253$ which is the full amount you gonna pay including interest. You take 18,253 and substract 17,500 and you get 753$ which is the amount of total interest you pay in three years. Now of course if you pay off your car sooner than 3 years you would pay less interest but the most interest u will ever pay is 753$ over 3 years and that is if you dont skip any payments and just pay the mininum Of 507.02$ a month

hope this helps

 

[QUOTE=stevelifts;9888389]
Hmmm... I was under the impression that I was 47.5k total lol. But, make sense thanks.

Do you think its wise to pay off now? Any penalty? I still owe about 9800$. Only reason I chose to finance was to build credit, since I'm still pretty young.

 

[QUOTE=nathantse;9888399]If you can pay it off then do it. No sense paying interest when you can afford it. Build your credit through credit cards instead and always pay it off at the end of your monthly billing.

 

OP- I was in the exact position as you. When i bought my CPO 2014 is350 f sport two years ago i bought it for 40k$ and i put down 30k$ as a down deposit and financed the rest and i had similiar apr % as you. Im 31 years old now.

I financed it for a year and a half and decided to just pay it off in full after a year and a half since i too was planning on building up credit and at the time i also have the funds to pay it off in full so thats what i did because im the type of guy who doesnt like monthly payments. A mortgage is enough for me.

But it is up to you, i would pay it off in full if i had the funds but if not the min payment wont put a dent in your wallet. But my logic is, why pay 30$ something in interest a month when i get use that money towards gas. GL

 

Coool thanks! I'll contact my dealer about it. Rather pay it off now, and save the car payment money for something else in the long run.

 

I have a different view about financing.
Mine is 1.9% financing over 5 years. So the total interest for me was calculated to around $1000 over 5 years. Not too bad.
For me, I had the cash to pay off the car at purchase but decided to down 15K and have the 30K financed. I used that 30K to invest and have made 12K off of investments in two years. Within 5 years, I can make up to $25k off of my 30K investment. So it was better for me financially to borrow. It is also a healthy boost to my credit score to have regular payments.

 

In my experience, it's better to contact who ever the loan is through. The dealership can do this for you of course. They would be all too happy to, because that means then they can charge you more fees. My dealership wanted me to go through them when I was paying off my lease, and buying my car. If I had done that, I would have been charged documentation fees of $595. Called LFS directly and dealt with them instead. They sent me all the paper work, I sent them the check, and they sent back the lien release and car title. All I had to do was go the the DMV.

 

This. Anything under 4% isn't worth paying off. Put excess into investments and you're better off. Most decent mutual funds return 6% so paying off isn't the best use of funds.

 

Very compelling points. If I do pay it off (~9800$ left), and something happens the next day (knock on wood it doesnt), I would be out 9800$ lol. More wise to put that money else where for the time being.

750$ interest over 3 years not too bad. I guess I'll just keep the payments till its done.

 

^^^ Listen to these guys, this is exactly what you should be doing. There is no reason to rush off to pay 10k to save like 700 bucks or whatever it is in interest when your money can make you money. S&P500 YTD performance is like +8.5-9%, Dow is around +6.5-7% YTD, so why not invest in an ETF that tracks these indexes (or whatever your preference may be) and grow your money? Not trying to turn this into a finance course or what you should invest in, but just play with the numbers and you'll see by loan maturity, you should be ahead of your $9800 (assuming there's no crashes or major events that impact the markets negatively)