Wednesday, March 18, 2009

Monthly Payments

Customers often call in and ask for a $300 payment on a $30,000 vehicle. Sound good? That would be a great deal, but the truth is that payment would only be possible with a $15,000 down payment. And most people are not prepared to put down that much money. While they may feel a bit disappointed or even cheated, the truth is that a little homework would have saved them a lot of heart break. Take for instance the following situation:

Joe Smith is looking for a $300 payment including all taxes, fees, discounts, etc. He has $2000 to put down and wants a 60 month loan. At the moment, USBank is offering a 5.99% interest rate for new cars. Assuming that his credit score is 730 or better, how much car can he afford to buy?

Using the USBank auto loan calculator, you'll quickly find the answer.

SALE PRICE

$15,978.31

DOC FEE

250.00

SALES TAX (7.75%)

1,257.69

TITLE FEE

35.00

DOWNPAYMENT

2,000.00

AMOUNT FINANCED

$17,521.00

MONTHS

60

INTEREST RATE

5.99%

MONTHLY PAYMENT

$300/mo

Is that different than you were thinking? If so, you may want to use the calculator before giving the evil eye to your local car salesman. That's really the way it works.

No comments: