Finance Miscalculations

[torrenova]

As some of you know, I'm trying to get a vehicle on finance. NOw lets forget all the paperowrk crap for a moment and look at the numbers.

The little men in the garages and even Toyota's website in LOS uses this formula (Nissan's uses the correct maths):

Initial finance amount * interest rate * years / months + Initial finance amount / months as a monthly amount.

Now the problem here is that it takes no effect of a depreciating balance. i.e If you borrow Bt500k then after 1 month, you have paid back some interest and some capital thus the interest portion is less and the capital repayment increases in every subsequent month.

I attach an excel spreadsheet which highlights this. Use need to add in Analysis ToolPack.

Has anyone either noticed this, argued it, had the finance company come up with the right numbers ir is the garage just trying to rip you off (which I find strange as you don't repay the garage, you repay the leasing company like Toyoto Leasing).

Car_amortization_formulas_email.xls

Edited May 6, 2007 by torrenova

[MarcoH]

As some of you know, I'm trying to get a vehicle on finance. NOw lets forget all the paperowrk crap for a moment and look at the numbers.

The little men in the garages and even Toyota's website in LOS uses this formula (Nissan's uses the correct maths):

Initial finance amount * interest rate * years / months + Initial finance amount / months as a monthly amount.

Now the problem here is that it takes no effect of a depreciating balance. i.e If you borrow Bt500k then after 1 month, you have paid back some interest and some capital thus the interest portion is less and the capital repayment increases in every subsequent month.

I attach an excel spreadsheet which highlights this. Use need to add in Analysis ToolPack.

Has anyone either noticed this, argued it, had the finance company come up with the right numbers ir is the garage just trying to rip you off (which I find strange as you don't repay the garage, you repay the leasing company like Toyoto Leasing).

Hi, i know the feeling,, went to Toyota back in 03,, they show me similar calculatios on the paper, i piss on those and went to chevy and got zafiara with 2yrs NO intrest...good deal.

went to Toyota agin when Pick up FOrtuna came ut,, cheaked out again what is they finance,, and only change they made is hike up the intrest rate.

from Back yard view from Ubon, is that Toyoa and Honda, been no 1&2 dont care so much abt customer complanes regarding they Finance calculations as they have enough thai to buy cars, Nissan& Isuzu try to get customer better deals as they dont sell so much cars in here.

FORD,,,well heard horror story from them as they went to 1 thai house and force they selfs in and took the car, thai coule there missed 1 payment, even it was approved by Bkk, BUT Ubon dealership did not accept they agreement with Bkk directly...

but that is isolated case as far i have heard, but one of those "good to know things"

[Meerkat]

I don't think it's a rip-off; it's just a non-amortizing loan. The problem is that most loans we otherwise come across amortize over the tenor, so a non-amortizer stands out. You just have to do the maths to convert it into an apr you're more comfortable with.

[Tywais]

I don't think it's a rip-off; it's just a non-amortizing loan.

That is correct and unfortunately normal here. Not trying to rip you off per se, just how it works here.

[Crossy]

I don't think it's a rip-off; it's just a non-amortizing loan.

That is correct and unfortunately normal here. Not trying to rip you off per se, just how it works here.

Yep, that's how it works.

Having said that I've yet to work out exactly how the 'interest free' payments on my new Ranger were calculated by Ford Finance.

[cleverD]

In the UK at the moment you can get car finance at a rate of about 3% but this is a flat rate it would have an APR of nearer 6%.

An example of £10,000 loan over 36 months @ 3% would be worked out as,

£10,000 x 3% x 3years(total 9%) = £900 interest

total repayable £10,900 for 36 months = £302 -78p per month

This is how it works in the UK but there are normally documentation fees etc which are in effect extra charges by the finance co. which will increase the APR of the agreement.