In my last life as an MLO, I'm going to take this as a reminder to: Tell you to check your amortization schedule and ensure that the payments you are making are having the impact you intend them to. When I was with BBVA, additional payments would only advance the amortization schedule. Meaning that for every payment from your first to last (imagine them numbered out) it would progress through the interest/principal assigned to each payment faster, without giving you a break on interest. The bank would get its money faster decreasing their risk. The only way this would be circumvented is if you designated a "principal only" payment of $10k or more. Many of the people I talked to found out way too late. And the mortgage industry has many of your payments servicers changing year to year (usually you'll get a notice about this in the mail) Make informed decisions on where your $ is going. This isn't financial advice, just a PSA. #lending #mortgage #payments #financing #banking
Michael E. Pyle
4mo
This stuff just straight pisses me off.
What was it variable interest rate on an auto?
Smita Philip
4mo
She couldn't buy anything else..?? A Honda, Toyota, a van...?? She had to get this...?? Doesn't look like an amortization problem looks like she wanted this big ass truck as opposed to other vehicles that were more affordable
keith jaehnert
4mo
So, back in 2021- she purchased a 90-105k vehicle with near a 5% rate if she had good credit. Took on a 1400 payment for what looks like a 6 year loan. I didn't run the numbers but the math pretty much works out. Not so sure it is predatory, unless they played games on her loan rate. This is 100% on the buyer- not anything else. That being said- new car prices have become insane.
Thomas Burke
4mo
Gotta question the math. At 6%, 6 year AM the schedule would look like this. The payment is $1392/month BTW. At no time did she owe near $74,000 having paid a combined P&I of $50K. Unless she is paying a boatload in Penalties-Late fees. PRIN INT BAL 1 $4,713.79 $11,991.68 $72,008.32 2 $3,974.17 $12,731.30 $59,277.02 3 $3,188.93 $13,516.54 $45,760.48 4 $2,355.26 $14,350.21 $31,410.28 5 $1,470.17 $15,235.30 $16,174.98 6 $530.49 $16,174.98 $-0.00
Joe McClaran
4mo
People need to learn about amortization schedules and how money is applied to your loans. I wish this was taught in high schools. I didn't learn about it until my accounting class in college.
Doug Hall
4mo
I read up on this and there's a little more to the story. She traded in a car that she was upside-down on so her negative equity was rolled into the new loan - how much that was is not disclosed. She put zero down payment for a total loan amount of $84,000 with an APR of 10.2% for 7 years which explains the $1400/month payment. The rest of the math doesn't quite work out so I suspect the amount of interest she's paid is being exaggerated for the sake of TikTok clicks. Regardless, she was not financially savvy and the dealership was more than happy to take advantage of her naivety. I will refrain from comment as to a Chevy Tahoe being a "dream" car...
Not sure why I was fed this by LinkedIn's algorithm. I'm assuming it may have recorded my previous post on rates/DXY. Unfortunately, this won't be a singular incident. In the upcoming years this will happen much more frequently. In this example, the client took a loan out on a car, a depreciating asset, (I mean they could use it for their business, but let's say it was for personal/leisure use) the consequences is that in itself the loan is negative the day she signs the paper. In simpler terms, if you buy an iPhone on credit, that iPhone as soon as you take it out the store is now worth less than the credit you took out on it. I mean, yes you can return it, but do people generally circle back onto the car lot as soon as they sign the papers? Now, here's the kicker, the credit is coming for it's lunch money, which is the interest accumulated. I fear this will be common place in the future with companies like Affirm, PayPal, Klarna and other buy-now-pay-later (BNPL) programs. It is essentially a mortgage on a lifestyle ; as inequality rises the only way lower and middle class will be able to keep up with the Joneses will be through these type of programs.
Earl Moore
3mo
I dont think it's financial literacy people need, I think some people have to evaluate thier priorities. Many people that over extended themselves are aware of it. It's the motivation of the purchases is where the problem is. Many people attach thier status and believe happiness will come with things you buy. This is reinforced through advertising, media and socitial norms. The vast majority of things purchased are not needed and many things purchased are never used or utilized to its true capacity. Hopefully this person finds thier way.
Founder & CEO | ClosedWon Talent | Quota Hunters
4moScary the type of decisions people make...