Paying Off The Rest Of A Car Loan, Something Is Wrong ?

[Nakonama]

Hi

1 year ago we bought a car on finance price 225.000 thb i paid 50.000 downpayment, and our contract with the finance company is 175.000 thb. and out monthly statements say 175.000 we pay off 3750 a month.

So now 1 year has passed and we want to sell it and buy a more new car.

so we call the finance company to ask for a Total to pay today, they tell us to pay 208.000 thb.

So now my question is, how the h... can this be ? she told my wife that we signed up to pay for 5 year so that is why.

before we bought a Honda PCX Bike, and paid it off after 4 months, they only charge us the intrest for that 4 months.

I mean, it shouldent be possible that that Loan is higher than we started ? or am i compleetly wrong, and all logic is lost in LOS ?

Any one who try this before ?

Nakonama

[beano2274]

what is the interest on the loan?

of course in any country around the world you pay more than you borrow, the first couple of months of payments only pay the interest in reality.

[taninthai]

Alot of the places here it doesn't matter if you pay the loan of early you still have to pay all the interest,got caught by it myself once never again

[gregb]

Unfortunately, they may be justified.

In their minds you may not have given them their necessary profit yet. Each agency has its own system of calculating what they are owed when you terminate a contract, but it is not unheard of that you have to pay them off for the full amount of their expected profit if you want to break the contract early. Remember, you don't actually have a loan...you have what is termed a "hire-purchase" agreement. There is a commitment on both sides to stick to this agreement.

However, I would certainly try and find out more about how they calculated this, and if they would be willing to reduce it. You can always threaten to simply default and make them come after you in court. That can sometimes inspire them to be more reasonable. But maybe not. Terms like this usually are not spelled out on your contract either, so you have a difficult road ahead of you. Sad as it may be, your only option may be to default and then try and settle with them out of court, or simply pay them off. Having the car accidentally drive full speed over a cliff has also been considered by some in the past, as most companies tend to be more reasonable with accidents than they do with voluntary termination of the agreement. Of course, I would never recommend that, as it might be considered fraudulent.

[Nakonama]

Alot of the places here it doesn't matter if you pay the loan of early you still have to pay all the interest,got caught by it myself once never again

But is it legal ?

If i knew this, i would never have accepted that loan offer,

I did ask specific for this when i accepted it, because we already knew we wanted to have better car before 5 year.

The bike we bought, and sold 4 months later, no scam like that at all.

Nakonama

Edited December 13, 2011 by Nakonama

[gregb]

Alot of the places here it doesn't matter if you pay the loan of early you still have to pay all the interest,got caught by it myself once never again

But is it legal ?

Yes it is, because you don't have a loan. You are unilaterally breaking a contract that you agreed to. There is no requirement for them to allow you to break that contract. They can effectively set whatever conditions they want to allow you out of the agreement.

[Nakonama]

Unfortunately, they may be justified.

In their minds you may not have given them their necessary profit yet. Each agency has its own system of calculating what they are owed when you terminate a contract, but it is not unheard of that you have to pay them off for the full amount of their expected profit if you want to break the contract early. Remember, you don't actually have a loan...you have what is termed a "hire-purchase" agreement. There is a commitment on both sides to stick to this agreement.

However, I would certainly try and find out more about how they calculated this, and if they would be willing to reduce it. You can always threaten to simply default and make them come after you in court. That can sometimes inspire them to be more reasonable. But maybe not. Terms like this usually are not spelled out on your contract either, so you have a difficult road ahead of you. Sad as it may be, your only option may be to default and then try and settle with them out of court, or simply pay them off. Having the car accidentally drive full speed over a cliff has also been considered by some in the past, as most companies tend to be more reasonable with accidents than they do with voluntary termination of the agreement. Of course, I would never recommend that, as it might be considered fraudulent.

Well, my calculations is a loss of 40-50k compared to a "COMMON loan type" so im for sure not going to any court, or making fraud is not worth it, But, i did NOT expect to pay them more than i owe....... it make me really angry now, as this week has been full of wrong price signs, ( oh that promotion was last week ) kinda shit, and now this.......... christ.

nakonama

[Nakonama]

Alot of the places here it doesn't matter if you pay the loan of early you still have to pay all the interest,got caught by it myself once never again

But is it legal ?

Yes it is, because you don't have a loan. You are unilaterally breaking a contract that you agreed to. There is no requirement for them to allow you to break that contract. They can effectively set whatever conditions they want to allow you out of the agreement.

Clever bastards !!!

I will go to the car dealer now, and discuss with him,

Too sad i ask them about this exaclty thing, when we bought the car. and they said ofcourse, but why shouldent they they just needed the signature and then they have caught us.

Nakonama

[NewlyMintedThai]

Depends on the contract. Did you read it before signing it?

[Nakonama]

Depends on the contract. Did you read it before signing it?

Yes, it was in english, and for my wife, in thai.

nothing dangeraus inthere, but as other said, maybe they simply dont write the bad things, and just rely on people give up.

Nakonama

[Nakonama]

what is the interest on the loan?

of course in any country around the world you pay more than you borrow, the first couple of months of payments only pay the interest in reality.

I agree on that, but

from 175.000 to 208.000 after 1 year, thats quite much !

Looking at it as a 5 year loan, it is not much ofcourse,

Nakonama

[Nakonama]

Ok, so i start thinking about a solution instead of getting angry,

any one know if it is possible to transfer to a new car, and expand/extend the loan

is this common ?

Nakonama

Edited December 13, 2011 by Nakonama

[Orac]

How much is the car worth now if it were to be resold. If it is more than the outstanding amount it is a harder place to negotiate from as the finance company can repossess the car and recover their money - if less then that would be a good figure to offer them to walk away from the deal.

[Nakonama]

How much is the car worth now if it were to be resold. If it is more than the outstanding amount it is a harder place to negotiate from as the finance company can repossess the car and recover their money - if less then that would be a good figure to offer them to walk away from the deal.

Well, actually, we get offer for 250.000 for it,

so that is both good and bad,

Nakonama

[Heng]

Car loans are structured differently from home loans (where you do save interest for paying it off faster). Paying off a car loan faster just gives you peace of mind that you don't owe anything on the car.

[Nakonama]

Car loans are structured differently from home loans (where you do save interest for paying it off faster). Paying off a car loan faster just gives you peace of mind that you don't owe anything on the car.

Yes however, when we sold the PCX bike, they didnt cheat us like this. we paid within 500 bath what i could calculate.

Nakonama

[WarpSpeed]

Unfortunately, they may be justified.

In their minds you may not have given them their necessary profit yet. Each agency has its own system of calculating what they are owed when you terminate a contract, but it is not unheard of that you have to pay them off for the full amount of their expected profit if you want to break the contract early. Remember, you don't actually have a loan...you have what is termed a "hire-purchase" agreement. There is a commitment on both sides to stick to this agreement.

However, I would certainly try and find out more about how they calculated this, and if they would be willing to reduce it. You can always threaten to simply default and make them come after you in court. That can sometimes inspire them to be more reasonable. But maybe not. Terms like this usually are not spelled out on your contract either, so you have a difficult road ahead of you. Sad as it may be, your only option may be to default and then try and settle with them out of court, or simply pay them off. Having the car accidentally drive full speed over a cliff has also been considered by some in the past, as most companies tend to be more reasonable with accidents than they do with voluntary termination of the agreement. Of course, I would never recommend that, as it might be considered fraudulent.

Well, my calculations is a loss of 40-50k compared to a "COMMON loan type" so im for sure not going to any court, or making fraud is not worth it, But, i did NOT expect to pay them more than i owe....... it make me really angry now, as this week has been full of wrong price signs, ( oh that promotion was last week ) kinda shit, and now this.......... christ.

nakonama

Can relate, TiT and it S-U-C-K-s..

[ignis]

Think you have got it a bit wrong or mixed up. Here the total interest for the 5 years is added to the 175.000, so your LOAN agreement would then be on the total amount.. They may discount 3 payments if you pay off early......... I looked into it well with a Thai friend that has a Finance Company.

The interest rate is not like in Europe x% per year, but x% per month.

Best option is buy new with one of the Companies that offer 0% finance, but that is not an option for many as 20 - 30% down is the norm

Edit: you can work it out, your LOAN was for 270,000, so far you have paid off 45,000, so you still owe 225,000 baht. on the figure's you give.

Edited December 13, 2011 by ignis

[flying]

Edit: you can work it out, your LOAN was for 270,000, so far you have paid off 45,000, so you still owe 225,000 baht. on the figure's you give.

Actually I thought he said his loan was for....

225k

He put down 50k

220k - 50k = 175k

He paid a year of payments at 3750 each or 45k total.

He mistakenly expects his loan to be 175k- 45k or 130k

They tell him 208k which he see's as higher than the starting principal of 175k..

But....he did not calculate in the interest at X% or even the possibility of having to pay all 5 years interest.

Sounds like basically what is called a pre-payment penalty used in many countries.

Where all or a part of the interest lost by the lender in the early pay-off is added to the balance.

Another possibility (although I think unlikely )is the interest on the loan was so high that none of his payments

caused the principal to drop & may have in fact been adding to it monthly if the 3750 monthly payment was not enough to cover the monthly interest charge.

Edited December 13, 2011 by flying

[Gary A]

It's simple add on interest and if you want to pay it off early and save interest, it must say that on the contract. You can pay any of those loans off early but the contract will say whether or not the total added interest will be reduced.

[ignis]

Edit: you can work it out, your LOAN was for 270,000, so far you have paid off 45,000, so you still owe 225,000 baht. on the figure's you give.

Actually I thought he said his loan was for....

225k

He put down 50k

220k - 50k = 175k

He paid a year of payments at 3750 each or 45k total.

He mistakenly expects his loan to be 175k- 45k or 130k

They tell him 208k which he see's as higher than the starting principal of 175k..

But....he did not calculate in the interest at X% or even the possibility of having to pay all 5 years interest.

Sounds like basically what is called a pre-payment penalty used in many countries.

Where all or a part of the interest lost by the lender in the early pay-off is added to the balance.

Another possibility (although I think unlikely )is the interest on the loan was so high that none of his payments

caused the principal to drop & may have in fact been adding to it monthly if the 3750 monthly payment was not enough to cover the monthly interest charge.

Opps I made a mistake as 5 years is 60 months [not 72]...... 3,750 x 60 = 225,000 so this is total LOAN = principal with interest, he paid so far 45,000 = 180,000 still to pay... So it looks wrong., but as you say looks like the 1st 1 or 2 years is paying the interest only...

[as per buying a house in Europe over 30 years the 1st 10 years the starting principal amount is about the same as you have paid only the interest]

So he has not paid the starting principal amount yet + still owes 33,000 in interest.. That is the way things are done here.

[Kilgore Trout]

Is this a used car you bought?

My wife told me that if you buy a used car you better pay cash, otherwise get a new car.

Something about the principal being owed for the loan on the entire loan amount, not on the amount owed.

Not the case with a new car, the interest on those actually looks pretty low.

[Nakonama]

Think you have got it a bit wrong or mixed up. Here the total interest for the 5 years is added to the 175.000, so your LOAN agreement would then be on the total amount.. They may discount 3 payments if you pay off early......... I looked into it well with a Thai friend that has a Finance Company.

The interest rate is not like in Europe x% per year, but x% per month.

Best option is buy new with one of the Companies that offer 0% finance, but that is not an option for many as 20 - 30% down is the norm

Edit: you can work it out, your LOAN was for 270,000, so far you have paid off 45,000, so you still owe 225,000 baht. on the figure's you give.

we bought it at 225.000, we paid 50k down payment, and then 3750 a month, over 5 year, 1 have paid 1 year now..

i do understand the idea of the total intrest, its a clever business like that :-) make me wish i had a loan company, how ever i belive, they make a lot of enemys i dont think im the only one having this in my mind now.

for the next car we need, we will pay 100k down the car price is just 400k so thats easy 25% but we dont want co-signers so not all can offer the finance deals. my wife dont have any familly members or friends who have high enough income to be co-signer, and we dont want to have it on our shoulders anyway.

but the 0% intrest is defenetly worth a look thanks for that idea.

Nakonama

[Nakonama]

Edit: you can work it out, your LOAN was for 270,000, so far you have paid off 45,000, so you still owe 225,000 baht. on the figure's you give.

Actually I thought he said his loan was for....

225k

He put down 50k

220k - 50k = 175k

He paid a year of payments at 3750 each or 45k total.

He mistakenly expects his loan to be 175k- 45k or 130k

They tell him 208k which he see's as higher than the starting principal of 175k..

But....he did not calculate in the interest at X% or even the possibility of having to pay all 5 years interest.

Sounds like basically what is called a pre-payment penalty used in many countries.

Where all or a part of the interest lost by the lender in the early pay-off is added to the balance.

Another possibility (although I think unlikely )is the interest on the loan was so high that none of his payments

caused the principal to drop & may have in fact been adding to it monthly if the 3750 monthly payment was not enough to cover the monthly interest charge.

You are right, my thought was, i paid off 45k, however i om aware of the 45k hold alot of intrest pay off, but, i could not imagen, my loan would be higher than what i started with, after 1 year, that is what make my heart beat fast today.

but i see more and more write, this is a common thing, so i dont think i should go to there office and tear it appart tomorrow, i can only do the next best thing, to scratch there cars when i see them at BigC untill i have my loss put on them.

( and this is ofcourse just a joke )

Nakonama

[Nakonama]

Is this a used car you bought?

My wife told me that if you buy a used car you better pay cash, otherwise get a new car.

Something about the principal being owed for the loan on the entire loan amount, not on the amount owed.

Not the case with a new car, the interest on those actually looks pretty low.

Well my wifes familly said i should buy a new one so they could look good when they borrow it, and when that didnt seal the deal, they said, all the bad spirits from the previous owner would follow the car...............

thank god i am not superstitious

Nakonama

[Nakonama]

Edit: you can work it out, your LOAN was for 270,000, so far you have paid off 45,000, so you still owe 225,000 baht. on the figure's you give.

Actually I thought he said his loan was for....

225k

He put down 50k

220k - 50k = 175k

He paid a year of payments at 3750 each or 45k total.

He mistakenly expects his loan to be 175k- 45k or 130k

They tell him 208k which he see's as higher than the starting principal of 175k..

But....he did not calculate in the interest at X% or even the possibility of having to pay all 5 years interest.

Sounds like basically what is called a pre-payment penalty used in many countries.

Where all or a part of the interest lost by the lender in the early pay-off is added to the balance.

Another possibility (although I think unlikely )is the interest on the loan was so high that none of his payments

caused the principal to drop & may have in fact been adding to it monthly if the 3750 monthly payment was not enough to cover the monthly interest charge.

Opps I made a mistake as 5 years is 60 months [not 72]...... 3,750 x 60 = 225,000 so this is total LOAN = principal with interest, he paid so far 45,000 = 180,000 still to pay... So it looks wrong., but as you say looks like the 1st 1 or 2 years is paying the interest only...

[as per buying a house in Europe over 30 years the 1st 10 years the starting principal amount is about the same as you have paid only the interest]

So he has not paid the starting principal amount yet + still owes 33,000 in interest.. That is the way things are done here.

yes i just need to be more aware when we buy the other one, we where too excited when we bought this one to think it over too many times and search the market.

How ever, im happy i dont sit with a 1 mio bath fortuner and need to sell it for some reason, and then learn i will owe money after its sold.

I calculated, the loss maybe in reality just 30.000 thb from what i expected to what i get. so that must be learning money, and tomorrow i will go sell the old bottles paper and plastic to make up for my mistake :-/

Nakonama

[janverbeem]

Something is wrong for sure.

The OP is expected to pay 3750 Baht a month for a period of 60 months.That would total 225.000 Baht for which the loan company would have to wait 5 years.

The OP has currently paid 45.000 Baht already and is asked for another 208.000 Baht which would make a total of 253.000 Baht or 28.000 Baht more than they would have collected after 5 years.

Even in the worst case that they want to collect all the interests over the 5 years they would only be able to claim 180.000 Baht at this time.

[saengsureeya]

Ok, so i start thinking about a solution instead of getting angry,

any one know if it is possible to transfer to a new car, and expand/extend the loan

is this common ?

Nakonama

Don't know if it can be transferred to the new car, but it happens, that you will be offered to extend it on an existing hired-purchase a few months before the loan-period is done.

[ignis]

Where did you get the figures from ? did you phone the Finance Company ?

My car I always buy cash, but the pickup with Finance as for Business, changedit in March still 13 months left to end of contract, got the figure from the Finance Company, asked in the showroom, the salesman phoned and got the figures was less + a few months ago got a cheque for 30,000 baht back from Finance Company.

[Nakonama]

Where did you get the figures from ? did you phone the Finance Company ?

My car I always buy cash, but the pickup with Finance as for Business, changedit in March still 13 months left to end of contract, got the figure from the Finance Company, asked in the showroom, the salesman phoned and got the figures was less + a few months ago got a cheque for 30,000 baht back from Finance Company.

Yes funny guy, but not everyone can buy a car in cash :-)

i just talk with the car dealer, he ask us to go down to the loan office which is near, so that is the next step.

I will ask them for a discount as we terminate before time.

thanks

Nakonama