Dealer Financing Question: 60 months vs 72 months

[Driv200]

Do you we have any car finance managers on here?

If I finance with Hyundai at the 72 month 3.9%, but pay off the car early (60 months), do I gain the savings of early pay off? I confirmed no penalty paying off early, but I am not clear if I get locked into a 72 month financed total amount?

Example:
60 months @ 2.9% = payment of $700/mth
72 months @ 3.9% = payment of $600/mth

I finance at the 3.9% 72month rate, but pay off early with $700/mth payments. Am I paying on the contract 72 months with finance charges or am I saving the (12 extra) finance charges by paying early? My job is commission sales and I am paid monthly. It's less stress for me if I have a cushion each month....even though I will pay more most months when I can. Clear as mud?

 

[lilxskull]

Hyundai has kind of high financing percentage for a low brand name. I think BMW offers like .9%, lexus offers 1.9%, Infiniti 0% and Toyota and Honda does 0% too. I am not sure if these percentages are right but I am pretty sure I have seen them on commercials.

 

[Catharpin]

If you are planning on paying it off in 5 years then get the 5 year loan. It is a whole point difference. More of your money goes against the principal and less is taken by interest.

 

[Driv200]

I did not ask my question very well. Hard to put into words. I understand the value of shorter term at a reduced percentage point. B/C of my commission based income, I prefer the longer term higher % due to a lesser payment required each month. Most months, I will pay more than my due amount in hopes of paying car off in a shorter time. If I do this, am I catching back up to the shorter term finance rate or am I still stuck paying the contracted 72 month finance charges????

I probably just better come up with more down.

 

[Catharpin]

Also if ~$100/mo is an issue for you then I would consider not strapping myself with a $600+ payment.

@ 3.99 paying it off in 60 months with a lump sum you will pay $4,885.24 in interest. If you paid $100/mo it would be 4,259.41.

@2.99 you will pay $3,114.19 interest.

So if you go for the higher rate and have that $100 cushion but don't ever use it, (because you are paying same as the 60mo loan) it will be over $1100 you paid for that privilege.
If you take the extra year and just make the 72 mo payments it will be over $5K in interest. So a $2K hit for getting an extra year to pay it.

I did all this based on $40K

 

[BacktoHyundaibychoice]

I think what the OP is asking is this:

Can you pay off a lease early and save some finance charges like you can a mortgage? By specifying additional $$ toward principal?

Hell if I know, never tried.

 

[crhbobby]

Yes- you will save money in interest by paying off a 72 month loan term within 60 months. You are paying an interest penalty for doing this of 1%. I would use use Excels Loan Amortization function and play around with different scenarios.

I think in your situation, you will have to be willing to accept paying more in interest in order to have the flexibility to pay $600 instead of $700.

I had this issue come up with my 2nd mortgage.. The bank said the rate would be 7.99 fixed for a 15 year mortgage and for a 30 year 2nd mortgage. (This 2nd mortgage takes it to 90% LTV, which is why the rate is higher than usual.) I wanted the 15 year, but I decided to take the 30 year, and in event I fall on hard times, I have a cushion. This situation makes it worthwhile because the rate is the same. When the rate is not the same, you will have to ask yourself if the extra $1000 or so in interest is going to be worth it over the life of the loan. (I am taking someone else's figure here - I just assume it is correct.)

Bob Hall

 

[robthoke]

If you pay more than the required amount, you will lessen the LENGTH of your note, but not the INTEREST rate. That is locked into the term of 72 months. Any amount above the required amount monthly goes straight into principal. What you pay in interest monthly is determined by the outstanding principal.

 

[Driv200]

I got a good feel for it. Thanks for your help guys. Looks like I should just do the 60 months and still try and pay off early from here.....rather than take the $1100 hit for the cushion on the 72mth term.

Going from a company car (free) to a personal car is taking a hit no matter how I look at it. I was looking at all options for payments. Thanks again.

Anychance anyone has an idea what incentives Hyundai will offer in November? Guess I will know tomorrow.