FRS finance question

[mav1178]

^^^ just as a sidenote: many leases have this, while loans generally do not. It ultimately depends on the lender but think about it: there's no early payoff penalty for a house, there shouldn't be one either for a car if you're smart about who you use to borrow money from.

Most of the time, the payoff amount is different than what you owe simply due to differences in interest. I know in the case of student loans, the amount is different because of how the interest is calculated vs. your payment period.

-alex

[Porsche]

Originally Posted by mav1178

^^^ just as a sidenote: many leases have this, while loans generally do not.

A lease is VERY different, yes. A FLEECE! is what Clark Howard calls them, but never mind. Some people are happy in a lease.

Most of the time, the payoff amount is different than what you owe

The payoff amount is EXACTLY what you owe. Or it should be. The payoff will be the balance following the most recent payment PLUS the DAILY INTEREST calculated for the number of days that have passed since the due date for the most recent payment. Banks employ a 360-day year to calculate the daily interest.

Often, when one calls for a payoff balance, the lender will compute the daily interest for another few days and give you that number so you don't come up short if you don't rush over to pay it that very day. They often say, "This payoff amount is good for the next five days." But, one can compute the balance down to the penny for the very day it's paid off at the lender's offices.

I've usually found them to be correct, except for occasions where I've pointed out an error and they then corrected it.

[Frstorm]

Porsche- when I paid off my tc I was told a number and I ended up having to pay another 2 dollars and 54 cents. Man that killed me jk. Only time a lease is good in my opinion is when a company is paying the lease. My parents had a job where the company paid the lease and they could pay off the buy out at the end and keep the car or just give it back. They always just gave it back since if they gave it back the company would pay for another lease so they got a new car every two years but it had to be a ford. That's also why they never paid it out.

[mav1178]

Originally Posted by Porsche

The payoff amount is EXACTLY what you owe. Or it should be. The payoff will be the balance following the most recent payment PLUS the DAILY INTEREST calculated for the number of days that have passed since the due date for the most recent payment. Banks employ a 360-day year to calculate the daily interest.

Sorry I typed too fast.... payoff amount is what you owe on that day (and is an amount that increases with each passing day), but it's usually different when compared to the balance on your most recent monthly statement.

-alex

[Porsche]

Originally Posted by Frstorm

Porsche- when I paid off my tc I was told a number and I ended up having to pay another 2 dollars and 54 cents.

Probably for another day or two of interest. Sometimes they may say that it'll take two days for your check to clear. Probably not, since they hammer those things within hours, but for a few bucks it's not worth disputing, I find.

Still, you can compute what you owe exactly quite readily. Just take the annual interest rate, divide by 100, and then divide by 360 to get the daily interest rate on the balance. Multiply that by the last balance for the three days of interest, say, since the due date for the most recent payment. Add that daily interest to the most recent balance, and that should be your payoff amount three days later. If the numbers don't work out, make them show you why. They can be wrong at times.

Only time a lease is good in my opinion is when a company is paying the lease.

Agreed. But, let's not open that can of worms here in this thread. Some people are happy with leasing. Some people buy lottery tickets, too. Not me, mon.

My parents had a job where the company paid the lease and they could pay off the buy out at the end and keep the car or just give it back. They always just gave it back since if they gave it back the company would pay for another lease so they got a new car every two years but it had to be a ford.

Heh. I'm picturing your parents zooming around in a Shelby or Boss 302!

That's also why they never paid it out.

'Cuz it was NOT a Shelby or Boss 302…

[Dake]

just thought I'd throw in regarding the April purchase vs first payment in July. Did they say something about no payments your first month? Usually that just means they take your payment and roll it in to your regular loan. You don't get a "free" month. you just pay sixty months' worth of payments in 58 or 59.

But yeah, great advice in this thread. If you can put a little extra towards the principle every month it will take quite a bit off the end.

I was doing well at work a few years ago and paid an extra thousand a month for a year on the mortgage and it dropped years off the back end. At five years in, I was then able to refinance a thirty year loan into a fifteen at a lower rate and my payments only went up twenty bucks!

[Porsche]

Originally Posted by mav1178

Sorry I typed too fast.... payoff amount is what you owe on that day

And if they could get away with it, I imagine they'd charge interest by the HOUR, incrementing your balance right up to the very hour of payoff!

(and is an amount that increases with each passing day), but it's usually different when compared to the balance on your most recent monthly statement.

Exactly. They're not letting you keep that money for so much as one extra DAY unless you pay interest for that day.

Those yachts of theirs are expensive!

[Porsche]

Originally Posted by Dake

just thought I'd throw in regarding the April purchase vs first payment in July. Did they say something about no payments your first month? Usually that just means they take your payment and roll it in to your regular loan. You don't get a "free" month. you just pay sixty months' worth of payments in 58 or 59.

Yeah, they did something, obviously, only WHAT they did is unclear. If Celica would post his actual loan paperwork (with personal info obliterated), we could compute these numbers exactly and see if his balance really is just under $25k as he says. As it stands, I cannot see how that payoff number could be so high, not with the numbers he's quoted. The real numbers would give us clarity.

But yeah, great advice in this thread. If you can put a little extra towards the principle every month it will take quite a bit off the end.

I was doing well at work a few years ago and paid an extra thousand a month for a year on the mortgage and it dropped years off the back end. At five years in, I was then able to refinance a thirty year loan into a fifteen at a lower rate and my payments only went up twenty bucks!

Frugality pays off! Well done.

[Dake]

Yeppers, gotta love saving seventy-five or so thousand dollars!

[Frstorm]

Porsche pmed you a joke about the lotto, well not joke persay. I agree I don't want o start an agrument over leasing each their own.

[Porsche]

Originally Posted by Dake

Yeppers, gotta love saving seventy-five or so thousand dollars!

Wow!

The young folks need financial education, which is sorely lacking in the USA. I don't think they have any IDEA just how big the savings can be. Your example illustrates just how much one can save when we talk about large sums of money over extended periods.

The youngsters aren't generally buying houses just yet, but they ARE buying college degrees, which these days can involve mortgage-sized loans. The grown-ups at the colleges and universities are killing the kids.

I have long said that in America the adults are eating their young.

I often try to warn the young ones, but they usually ignore me. Occasionally, I'm gratified to learn that someone actually listened and modified their plans. In fact it just happened here on these forums recently. I was so happy to see that!

The young, through IGNORANCE, are being victimized horribly. It's a tragedy what's happening to our nation's youth, our college kids.

Well...

We are straying a bit from the OP's original question, aren't we. Sorry about that, folks.

[Porsche]

Originally Posted by Frstorm

Porsche pmed you a joke about the lotto, well not joke persay. I agree I don't want o start an agrument over leasing each their own.

On my way over to read it now. Thanks.