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Auto Loan contract question

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alexgep34

Junior Member
What is the name of your state (only U.S. law)? VA

I just recently bought a car and was going through the sales contract and noticed that the monthly payment on the contract is slightly higher than several calculations I've done on my own, which all come up with the same lower monthly payment figure. Is this fraud on the part of the dealer, trying to "pad" the contract to get more money out of me, hoping I won't notice? If so, is this grounds to nullify the contract?
 


Q - Is this fraud on the part of the dealer, trying to "pad" the contract to get more money out of me, hoping I won't notice?

A - No


Q - is this grounds to nullify the contract?

A - No
 

Zigner

Senior Member, Non-Attorney
If there's been a mistake, contact the dealer to have it straightened out.

Enjoy your new car!


What is the name of your state (only U.S. law)? VA

I just recently bought a car and was going through the sales contract and noticed that the monthly payment on the contract is slightly higher than several calculations I've done on my own, which all come up with the same lower monthly payment figure. Is this fraud on the part of the dealer, trying to "pad" the contract to get more money out of me, hoping I won't notice? If so, is this grounds to nullify the contract?
 
Probably no mistake either.

The calculations on the contract have to be correct or the bank won't cash it. The hidden factor that changes payment amount is days to first payment - the more days, the higher the payment. When you use your calculator/spreadsheet/website to compare against the contract, 30 days to first payment is assumed.
 

Mrs. D

Member
Tim is probably on to the difference between the payments you calculated and what is on the contract. Does the contract say somewhere how interest is calculated? Most of my loan contracts have a statement somewhere like "interest is calculated as simple interest" and then goes on to give the formula used. I frequently use these formulas to calculate my remaining balance, and have only ever been off by a penny or two from what the statement says.

Another consideration is whether you are using the full loan amount from the contract to make your calculations. Many people just look at the sticker price, subtract their down payment and calculate. However, taxes, license fees, temporary tags, and other fees are included in the loan amount.

If neither of these things get you to the right number, and the difference is significant (i.e., not a penny or two, as that could simply be a rounding error), then you might want to talk to the dealership and see if they can walk you through the calculation to see if there's a mistake.
 
More than likely, the small difference is due to the interest calculation. In your calculations you probably didn't include the extra day from the leap year, and you may have even assumed there were just 30 days per month (or made some other incorrect assumption). Those small differences impact the interest calculation, which impacts your monthly payment.

More importantly, you must realize that the amount you pay per month is just based on a forecasted schedule that was created by guessing about certain factors (such as the date you make your payments) that will inevitably change. Because of those changes, you will ultimately end up paying slightly more or slightly less than the product of your monthly payment times the number of payments.

So, to answer your question, no scam.
 
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