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DrTre

Dealer offered, I refused, now I'm confused..

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I went to a dealer to try to purchase a vehicle. My previous vehicle was totaled and I still owe 892.00 on it when my insurance tototaled it. The vehicle I went to purchase was $17,888. The dealer offered to pay the 892.00 and cut me a check for the sales tax. Given that my credit and my wife's is in the low 500's (I know, we're working on it) I figured that I'm going to get stuck by interest.

 

What the dealer came back and said was my payments would be between $500 & $512 /month for 72 months. If I'm not mistaken $512 x 72 = $36864.00 over 6 years. This looks like an interest rate of 89%. Am I wrong?

 

Needless to say I didn't take the deal, but what they said threw me for a loop. They said that I could come back in a year, after making timely payments, and refinance.

 

Here's my question:

If I had taken the deal, wouldn't the bill of sale had read $36864.00 and after a year's payments of $512 monthly I'd had paid out $6,144. That would leave $30720 on a vehicle that the blue book value on it is currently $21000. Wouldn't that put me in the hole almost $10000 at refinance time?

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$36864.00 would have been the total amount of payments made including the amount financed, and the finance charges, not the "sale" price of the vehicle.

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Thanks for the reply.

 

So depending on the sale price determines whether or not I'd be in the hole at refinance time?

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That intrest rate is high. Although my last vehicle it was 25%, I only had a year left to pay on it, although I was late 5 times in the last 2 years. I guess that's what I have to live with until the credit score goes up, if I want a dependable vehicle..

 

I was confused about the selling price, but I am more clear on that now. Any more info that I need to know about?

 

Thanks.

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They said that I could come back in a year, after making timely payments, and refinance.

 

That's not possible, They cannot finance a vehicle they no longer own.

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Ohhh.... I missed that part, thanks.. But I have the option to refinance it right? Or is refinancing a bad option for a vehicle?

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