Car Loan - Compound Vs Flat Interest

[jasonc]

I just bought a Fortuner from the Toyota dealership on Sathorn. (nice folk by the way).

I paid 40% down and we financed the remaining bit through my wife.

I was going over the monthly payments and loan papers today and I realized the 3.15 interest rate is charged across the board for the full 48 month terms. I'm paying interest on the full loan amount even in my last month. Don't they understand compound interest calculations here? It changes my monthly payments by 1000b every month.

This is through Toyota but i wonder if someone in the middle is pocketing the extra funds somehow. Sounds odd to me. Any one else have experience with this? Common or am I getting taken advantage of?

This is the simpleton math they presented to me:

Loan_Amount x .0315 x 4 + Loan_Amount / 48 = monthly payment

[scubamatt72]

Yep, same for me. That is they way they seem to do it here. You should have been made aware of this before you bought the car.

Hope you are enjoying the car. I just got one, and I just long to finish work for the day to take it for a spin!

[moonoi]

Yeah my agreement is the same as well. My car is a Mazda so I'd say its normal here.

One thing though my agreement gives me a discount if I pay up in the first 2 years (Only pay the interest on the amount until the point I pay it off, as opposed to some where even if you pay it early you still have to pay the interest over the total loan term)

[Gary A]

You're lucky. The shortest term I could get was five years at a Honda dealer. I had several of the salesmen talking to finace people on the phone. Since the interest rate was low I wanted to finance it for one year or two at the longest. The interest is a normal add on and not as cheap as it sounds. LOL!

[jasonc]

Thanks for the reassuring feedback guys.

They did make it clear to me before. I'm going through the papers before I sign and pick up the car/truck this Wednesday.

Toyota also mentioned the posibility of saving some interest by paying it off in half the time but the representative said it was not a sure thing. We will need to 'make a deal' with the finance company if we want.

On a side note... I must say this whole finance process was amazingly easy. They needed little documentation. I'm not officially married, my wife (technically GF) has NO income, I am self employed in the US with no Thai work permit, No guarantee signer... I know in the states the finance would have been denied. I guess 40% down played a big role and the wife's father had to sign some of the papers.

[Neeranam]

Has anyone any experience on buying a car by finance and paying it off before the time - should you agree before you sign the contract? Do you have to pay the interest for the whole time?

[Gary A]

Has anyone any experience on buying a car by finance and paying it off before the time - should you agree before you sign the contract? Do you have to pay the interest for the whole time?

That's exactly the deal I was trying to get. I was told straight out that the interest is calculated then added to the principle. The total is divided by the number of months financed. Whatever the number of months is left is the payoff. I passed on the deal!

[paulfr]

This is the simpleton math they presented to me:

Loan_Amount x .0315 x 4 + Loan_Amount / 48 = monthly payment

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Yeah that is the way they do it here in LOS.

I bought a Toyota with very similar numbers and terms.

If it is any consolation, I went to my bank and applied for a car loan there and the terms were exactly the same. It is not a simple interest loan as we know it back in the West.

[chanchao]

> I must say this whole finance process was amazingly easy. They needed little

> documentation. I'm not officially married, my wife (technically GF) has NO income,

> I am self employed in the US with no Thai work permit, No guarantee signer...

> I know in the states the finance would have been denied. I guess 40% down

> played a big role and the wife's father had to sign some of the papers.

That's because he owns the land that's used to guarantee the loan.

You and your visa/work permit status, or your wife and her income (or lack thereof) have completely nothing to do with granting you the loan.

Your dad in law apparently likes and trusts you, because if you sell the car and take off to somewhere, he loses his land.

Bring him a black labelled bottle sometime.

Cheers,

Chanchao

[Neeranam]

I paid a deposit on a second-hand car today.

7% pa if I get a gurantor. 7.5% if I don't.

If I want to pay it off after a couple of years, I don't have to pay the interest for the full 4 or 5 years.