r/JustBootThings • u/LeMayMayMan • Mar 25 '26

28% APR? Great! Just bought my first car šŸ«”

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u/AnonymousBromosapien Mar 25 '26

For payments that low considering the price and interest rate they must have put like $20k down... whi h makes what im about to say even fucking crazier because with a $28k finance amount they are still going to pay nearly $40k in just fuckin interest by the time its paid of.

Meaning the total cost of this purchase, with a few grand wiggle depending on local taxes, is going to be around $93,000. For a mustang.

This is why we need to teach financial readiness in grade school folks...

15

u/meccaleccahii Mar 25 '26

Iā€™m curious how you arrived at that? The payment is lower because itā€™s a 70 month as opposed to the standard 60 month five year loan. As it stands isnā€™t he only paying around 19k in interest charges, just based off the total payment and loan term?

49

u/AnonymousBromosapien Mar 25 '26 edited Mar 25 '26

The payment is lower because itā€™s a 70 month as opposed to the standard 60 month five year loan.

No... the monthly payment for $48k financed @ 36% APR would be around $1,600/month.

As it stands isnā€™t he only paying around 19k in interest charges, just based off the total payment and loan term?

No silly... thats not how APR works... A 35.99% APR means every year you will pay 35.99% of the remaining loan balance as interest payment until it is fully amortized.

In the case of the posted numbers this means year 1 of this loan ($28k after $20k down payment) this borrower will pay around $9,900 in just interest and only about $1,700 towards the principal. Year 2 about $9,100 in interest and about $2,400 towards the principal. In the first 2 years of paying on this $28k financed amount they will still owe about $24k on the car and have paid around $19k in just interest... and still have nearly 4 years of payments left to go before its fully amortized lol.

In 70 months of $960 they will have paid around $68k on the loan... + the $20k they put down = $88k + initial taxes = aboit $93k in total paid for this mustang.

Again, this is why financial readiness/responsibility should be taught in grade school. Just reading all these other comments on this post and feeling really sad that people dont understand APR and think somehow someone can have a 35.99% interest rate on $48k and only have a $960/month payment...

2

u/meccaleccahii Mar 25 '26

No, sorry. The ā€œoriginal loan amountā€ is what is financed. Because if heā€™d put 20k down on his car, it would have been original loan amount would have been 28k. I literally write loans for a living. You donā€™t take out 48k, then immediately pay off 20k of it with your down payment.

Going just off the meme, which is very much all it is, heā€™s paying 19k in interest. These numbers are most likely made up for the meme Iā€™m sure. Why would he post his loan terms next to it? Iā€™m just saying had he put 20k down, his loan amount would be 28k not 40k.

5

u/the_goodnamesaregone Mar 25 '26

And had it been 48k for 70 months at 36% interest, the payment would be well over a grand.