toxin440

Hello all,

I bought my RX8 in october after 2 months of researching, my question today is about the way Mazda American credit handles payments and such.

A little background info:
I put $10,000 down on a total price of $32,000 (it was 28+tax+ext.warr) so I financed ~$22,000 for my 2005 RX8

I'm a recent college graduate and (yes I can really afford this on my salary) but I didnt have any credit history (never had a credit card before a few months ago) and ive never "messed up" with any credit before.

Iv'e heard no credit is just like bad credit, so after a discussion with my bank (regions) I was told that no matter where I go my interest rate will suck (17.99% is what I got hit for at Mazda American Credit) I know its horrible but im getting out of it ASAP with re-financing, so please don't **** on me for that.

NOW, my question is i financed for 60 months, with payments being $560 a month I have been doing double payments every month and as I have noticed Mazda treats that in their system like I'm just paying for months in advance instead of applying it to the principle amount owed and re-calculating the monthly payments down. Is it better to just make the (regular) monthly payments online, and send in a check (along with a note) telling them to apply this EXTRA money to the principle to slowly start lowering the monthly payments?


I'm not a financial wizard at the specific rules of how this stuff works, but needless to say I'm going to be refinancing thru my bank in about 2 months (i went with MAC to get that $1000 off)

I guess im just asking from the looks of it when I pay extra online they just apply it to the next months balance and not ACTUALLY taking it as a principle payment, do i need to specifically send in a check saying "here is an extra 500 dollars towards the PRINCIPLE" to make them realize what im trying to do?

Any input is welcome! Thanks in advance
Jeff Johnson

expo1

It would help if you can provide quotes from your loan documentation in regards to pre-payments, early termination, payment of interest etc. Consumer loans vary state to state so without more information about YOUR loan you will have to wait for someone with knowledge of Texas laws to reply. The other thing you can do is simple call the people that manage the loan and ask them.

Elara

I believe you're looking at simple interest here, not compound, so paying more every month isn't going to change how much you owe. I do the same thing (just not double) and it's just put me 5 months ahead, and nothing else.

I could be wrong, though, and if I am, I'm sure someone will jump in and correct me.

Animagix

I financed my car through chase bank and there are no penalties for paying ahead of schedule. I'm no financial wiz either but I think the next year it reduces your overall payment... correct me if i'm wrong.

I have a monthly of 365 and wanted to pay double on every pay stub to reduce the time it takes to pay off my car. So far that's just my theory as I haven't tried nor have i called my bank to ask. I think you should call them. and let us know.

toxin440

yes I know there is NO early payment/payoff penalty from MAC financing...

I heard you "should" wait 6 months to re-finance thru your personal bank if you originally financed thru the dealer, Maybe im just **** about seeing the numbers actually go down on the MAC website payment schedual.

Hell paying $1000 a month for a car and it seems like the numbers never go down lol, but I think its mostly because of the shitty 17.99% interest (and i think its compound interest not simple interest)

If I were to "just" do the minimum payment for 60 months like the contract states, the 22,000 financing would wind up being $44,000 repayment (principle + interest) total. CRAZY!

Thats why im paying on it fast/early and hopefully going to get 5-8% interest here in a month or two.

AdamK

I don't think this is correct. My MAC contract says I can pay off the loan any time I want, without penalty, and all I have to pay is the outstanding principle. I haven't made a single payment yet because I just bought the car, but I intend to payoff the entire principle as soon as the papers arrive. I did this to get the $1000 MAC rebate. I'll let you know in a couple of weeks if this works. I don't see why not.

I've paid off auto loans in a similar way before. When I bought my Maxima I got a Nissan loan at .9% interest. I was able to pay off that loan with a zero interest credit card by only transferring the principle. Then I paid off that credit card over the course of a year while it had zero interest. At .9% the interest the money saved wasn't that much, but the effort was minimal and I saved a few hundred dollars. Plus, I had clear title to the vehicle after the transfer.

You can go to the following web site, punch in you loan details, and then put in extra principle payments. It will tell you how much sooner your loan will terminate and how much interest you'll save in the process. You HAVE to tell the loan company the extra payments are for principle. If you don't you'll find they just apply them to future payments without re-amortizing the loan!!

http://www.youngmoney.com/calculato...an_early_payoff

toxin440

thank you! very useful information

Ericok

You can pay off your entire loan balance with your first payment to MAC without penalty (your paperwork from MAC will tell you what the balance is). You'll still end up paying the 1-2 months interest that accrued between the time you bought the car and when the paymet arrives at MAC (around a couple hundred bucks). The payoff does not affect your $1,000 rebate.

AdamK

Great! That's what I was hoping for!! Even if you can pay cash for the car, finance $5k and two months of interest is only $75. Small price to pay for $1000 cash back.

Conundrum

iTrader: (1)

To get the MAC rebate, I was told by three different dealerships that you have to make payments for at least 90 day (3 Month), after that, you can pay it all off, refinance with bank or stay with MAC.

AdamK

There's nothing in the contract that says you HAVE to. According to my dealer it just makes them look bad to MAC if you pay it off right away. The dealer would prefer you pay for several months so it doesn't look like they gave you the idea to do it for the $1000.

Postul8

560 * 60 = $44,000 ???
Still outrageous on $22K, but wouldn't that be 33,600

BunnyGirl

My payment is supposed to be $480-$490 for 84 months on approximately $33,000, as quoted by my credit union when I checked into getting preapproved. This is basically to finance the full price of the car since I spent my savings on paying off my vacation and paying down bills when I decided I could forgo a car for another year or two. Then I was told after a job interview that I had to have a car, so by that time I had already spent the money and no longer have a down payment. Oh well.

Ericok

That's absolutely not true (the three month part). You can pay it off with the first payment - no penalty. You can refinance with anyone at any time that will take your loan. The MAC interest rate is pretty high so it would be to your benefit if you can find someone cheaper and the sooner the better.

Just to make clear how financing works: When you make payments, you should be aware that the lender collects his interiest up front and you pay very little on principal. The first payments are almost ALL INTEREST. You really don't start seriously repaying your principal until the tail end of your loan. Don't think the the first month's interest is only $75, it's not - it's just about your entire payment. If you wait 3 months to pay off the MAC loan, you've pretty much covered MAC's $1000 rebate.

AdamK

Yes and no. About 3/5 of the $560 payment is interest on a 60 month term. Run the same loan at 30 years, (360 months), and almost ALL of the $331 payment is interest. But, you are right in saying the $1000 rebate would be consumed after 3 months since the interest portion on the $560 payments are $330.

This is the major difference between long term home loans and short term car loans. While the formulas use to ammortize them are the same, the length of the term makes a BIG difference in the interest to principle ratios in the payment structure.

I've attached some pictures of the partial tables I ran using an Excel spreadsheet. They show the first 8 months or so of the table, but you can get the idea.

AdamK

Just got the papers from MAC for my 1st payment. Sending in the check tomorrow for the balance. Nothing saying you can't pay it off. In fact they specifically list the payoff amount and the date it's due. It amounts to nothing more than the principle owed and about 6 weeks of interest! $1000 for less than a hundred bucks! Perfect!!

AdamK

I noticed the statement from MAC also listed the web site http://www.mazdacredit.com. If you go there and set up an account for your loan you can get even more up to date payoff info. The paper statements list the payoff value at 2 weeks out. At the web site you can get payoff info for date a week or so out which can save you even a few more $'s.

rotarydrifter

iTrader: (2)

WOW!!!
Ive been sending extra money for a while now.... and i called Mazda American why they're not applying those payments to the principle, and they say i couldn't do that!!!

unless i made a payment of $5,000 or more.... i was like wtf!?

they had told me that i could only sent money towards my payments...

i purchased my rx8 used, financed it at 400 a month for 5 years... at an 11.9% intrst rate...

yeah i got screwed over, i had no credit score and wanted to ask you guys for advice...


ive had the car for a year and a month now, the first 5 months i sent 1,000 a month then skipped a month payed 600 for the next 3 months skipped a payment(only because my statements where saying that i didn't owe anything).... yeah my payoff amount went down but i still didn't see a major difference...

what would my next move???

thanks!

NACer4lyf

iTrader: (1)

dang i got my car used in september of 08 for 14900 i had a thousand put down on it and financed the rest (13900) at 8.9% my dad co-signed my car is an 04 and my payments were 265.98 now they are 235.88 paying a little extra each month. but i didnt finance w/ mazda so looks like i know for next time who NOT to finance with lol

rotarydrifter

iTrader: (2)

yeah i know i got RAPED....
i think imma re finance with some one else, maybe i can get a lower intrest rate now that i actually have credit...