Hey so i'm looking to finance a car, and i have some issues with the numbers im getting.
So after all of the fees, taxes, my down payment, the unpaid balance is $8538.67, and i'm new to having credit so the interest rate is pretty high, its at 21%.
So $8538 plus the 21% interest leaves me around $10,300.
The option they gave me is $250 a month for 60 months and 250 x 60 = $15,000. Which seems off if i am to only owe $10,300.
So what im wondering is where did that extra $5,000 come from or am i just calculating things wrong.
Any help would be appreciated! Thanks.
To answer your question: 21% does not mean 21% of the principle. Since you are making monthly payments, you divide the the 21% by 12 to get 1.75% per month. So the first payment is $8,538 x 0.0175 = $149.42 for interest and $100.58 on the principle. The next payment is less for interest and more for principle, but you can see already that you are paying a heluva lot for this car.