Some of you may remember I was shopping around to refinance my car. Peoplefirst has a 5.19% interest rate for loan refinances right now if you choose automatic payment.

I received my paperwork and have a few questions:

1)There is a $925 finance charge. What is that all about? I don't think my credit union charges anything to do a refinance and I thought peoplefirst didn't either.

2)Filing Fee. Is this the same as the fee to change lien holder? If so, I was told it would be $10 on the phone but on the contract it says $65.

By adding the finance charge to my finance amount, my monthly payments come out pretty close to what they already are (because it adds 6 months and $925 to my current loan but at a lower rate).


I did the math and here is what I get:

11,280 (finance amount) *
5.19% for 36 months

Monthly
313.33 (monthly at 36 months) + 16.26 (monthly interest) = 329.59 (they say it should be 339.03)

Yearly
(11280*.0519)=585.43 (they say it should be 925.08)

Am I missing something?

 

I used peoplefirst to refinance my Vette. I thought they were great and had zero problems with them. I did pay a filing fee of like $65. The $925 finance charge should be the total amount of interest you are paying over the life of the loan.

How did you figure out your monthly payment? I figured it out and came up with the same thing they came up with. They compound monthly I believe so you need an amortization calculator to do it, or you can figure it out manually but it would take longer.

 

Thats my problem, I didn't think about compounding the interest. Thanks! Do you think it is worth it to go from 7.49% at 30 months (my current loan) to 5.19% at 36 months (new loan)?

 

$339.03 is the correct amount fo rthe monthly payment. Your finance charge is $925.08, this is the total amount paid in over the 36 month term, (339.03 x 36 = 12,205.08 less the amount financed $11,280.00 = $925.08). Auto loans are actually compounded daily, not monthly, that is why there is a "per diem" rate or daily charge on an auto loan. There is a calculation formula for computing monthly payments but trust me on this one, it is the correct payment amount. Hope this helps. I can give you th e formula if you want, I got it out of one of my engineering books.

 

I don't know what your monthly payment or term is now. If you can keep the same payment and reduce the term then it is probably worth it. Or if you can reduce your payment and keep the same term then it is probably worth it.

IMO anything you can do to reduce the monthly payment or the amount of time is a good thing. If it is only a couple hundred dollars then you have to figure out if it is worth going through the hassles.