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Anonymous
Anonymous asked in Business & FinancePersonal Finance · 2 months ago

How are interest rates paid when buying a brand new car?

Im going to purchase my first vehicle this week. Im 18 and have no credit but I was approved at the dealer for a new 2019 VW. On the deal it says 60 months $393-$403 and then the guy wrote 18% off to the side but Im not sure if that 18% is already included in the month payment or its plus 18%. Or how is that paid ? 

14 Answers

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  • 1 month ago

    You shouldn't sign ANYTHING until you FULLY understand this. Financing a car at 18% is highway robbery. Take someone with you who has been through this and can explain it to you. It wold take dozens of pages to explain it here,

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  • 2 months ago

    You need to have someone you trust read the contract and explain it to you.  We do not have enough information here.

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  • Anonymous
    2 months ago

    You are FULL OF CRAP. 98% of 18 year olds with no credit would not be approved for a new car even with a predatory 18% rate.

    Also, your math does not work, 60 months at that rate implies a loan of around $15,700. The cheapest VW is a lot more than that.  Or are you putting $7000 down?

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  • Eva
    Lv 7
    2 months ago

    Do NOT sign the deal and never sign a deal without understanding exactly what you're signing. That's an astronomical interest rate. At 18, I doubt you can afford the payments and insurance. You do not need a brand new car. Buy something a couple years old, and go to a local credit union to see if you can get a loan for it there. It would help if you have a decent down payment. At your age, especially if you don't have a job, you're going to find it difficult to get a decent interest rate. Anything over 6% is a rip off. Dealer financing is usually not a good deal unless you can get one of the special 0 - 3% deals. They do have a shorter term though and therefore higher monthly payments.

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  • A.J.
    Lv 7
    2 months ago

    18, no credit, outrageous financing.

    60 months at $400 a month and 18% APR is a loan of about $15,750 and total payments of $24000.

    Is this a lease, or do you actually own the car?

    Is there a large down payment involved? Is a cosigner assumed that you bind someone else to pay the loan if you can't pay it?

    Is it a cheap 2019 lemon car dealer demo with miles on it?

    You are responsible for the payments and contract when it's signed.

    Typical finance rates are only a few percent for qualified buyers.

    Likely your car insurance rate will be high. Can you afford the car?

    Very few 18 year old buy a factory new off the lot car. Is this a 2019 used lease return?

    The interest is included in the payments.

    This is one amortize a loan web site:

    http://bretwhissel.net/cgi-bin/amortize

    Before you sign any contract, understand EVERYTHING. They will repossess it if you miss payments and mess up your credit rating for years.

    Something is very wrong in the dealer and your jumping to try to buy a new car with no credit rating.

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  • 2 months ago

    Normal people would have the interest already included in the payment.  Car salesmen looking to convince an 18 year old into agreeing to a ridiculously expensive loan are not normal people, so you should ask.  

    Better yet, you should walk away from this deal entirely.  When I plug that interest rate, that payment and that term into a calculator I get you borrowing around $16,000 and will end up paying about $8,000 in interest.  The odds of you regretting this decision to borrow money at 18% interest are high.  

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  • Anonymous
    2 months ago

    18% that's too high

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  • n2mama
    Lv 7
    2 months ago

    The contract will tell you the total amount you are paying and the breakdown of that cost. 18% is a horrible interest rate for a car loan, have you shopped around to see if you can get something better? I realize you may have no established credit, but this is a bad way to get some. If you have a bank account, talk to your bank and see if they offer auto loans for a better interest rate. And consider buying a used car rather than a new car.

    • A Hunch
      Lv 7
      2 months agoReport

      He's 18 with no credit - sounds like a fantastic interest rate for someone in his shoes.  Should sign the deal because it's a horrible deal... but

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  • 2 months ago

    It doesn't really matter either way. If you buy a brand new car at 18% interest at age 18 with no previous credit you will be broke, repossessed, and spend the next 7 years working to pay off the debt and repair your credit.

    You are committing financial suicide.

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  • Anonymous
    2 months ago

    The contract needs to clearly lay out the cost, fees and interest rate or you walk away.  Don't let them blow smoke up your butt because you are young.

      

    60 months at $400 a month = $24,000 that you will pay back.  You don't give any idea what trim level or options you are getting so I have no idea what it should cost before financing.  Most new cars offer 0% to a few percent financing, you likely won't get 0% for 60 months.  IF they are charging you 18% interest, run now from them, they are screwing you over big time.

     

    Have you looked into what insurance is going to cost you?  That might be another unpleasant surprise.

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