how good is 10.85% financing?

Hamster said:
How the hell....

I put down 70k on top of the trade-in to a total of 155k on 250k car and still got 10.26% (that's prime + 1.26 right?) linked. Does age play a factor?
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I got prime -1% in April :)
 
xrapidx said:
And no deposit - what I said earlier.

All the BIG deposit, shorter term posts work against you.
Click to expand...

Big deposit and took it over 72 months.... #&$^#!#!!!!

Sigh. Just pay this baby off ASAP!
 
Hamster said:
How the hell....

I put down 70k on top of the trade-in to a total of 155k on 250k car and still got 10.26% (that's prime + 1.26 right?) linked. Does age play a factor?
Click to expand...

Yes. The younger you are, the higher risk you are.
 
Banks make their money by charging interest and also fees. Logically, they want more interest. So, they need to offset the time period with the interest (as well as other risk factors, but for simplicity lets only use this).

So, if you take out R340000 for 48 months (ignore the deposit), tehy will charge you 10,5%. Which will work out in paying about R1 76 522 of interest over the 4 years.
If you take out R340000 for 72 months (ignore the deposit again), the bank can give you a lower interest rate. Why? Well, over a longer period, you will pay more interest. So at 72 months at 9,5%, your interest is R259 863.

Bingo, the bank makes more money. So why does bigger deposits sometimes help. Because there are other risk factors, like age, area, credit standing etc. But generally, banks want more interest.

So, how do you get around this. Shop around for better rates. OR, you take the 72 months at a lower interest and pay an additional amount in every month to make it equal to a 48 month period payment. If you do it like that, you pay the vehicle of in less than 48 months (46,9 months) at a lower interest rate. And if they penalise you, you take them to the NCC as this is not allowed
 
creeper said:
Banks make their money by charging interest and also fees. Logically, they want more interest. So, they need to offset the time period with the interest (as well as other risk factors, but for simplicity lets only use this).

So, if you take out R340000 for 48 months (ignore the deposit), tehy will charge you 10,5%. Which will work out in paying about R1 76 522 of interest over the 4 years.
If you take out R340000 for 72 months (ignore the deposit again), the bank can give you a lower interest rate. Why? Well, over a longer period, you will pay more interest. So at 72 months at 9,5%, your interest is R259 863.

Bingo, the bank makes more money. So why does bigger deposits sometimes help. Because there are other risk factors, like age, area, credit standing etc. But generally, banks want more interest.

So, how do you get around this. Shop around for better rates. OR, you take the 72 months at a lower interest and pay an additional amount in every month to make it equal to a 48 month period payment. If you do it like that, you pay the vehicle of in less than 48 months (46,9 months) at a lower interest rate. And if they penalise you, you take them to the NCC as this is not allowed
Click to expand...

I think your math is wrong, but the idea is correct.
 
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