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Is this the way most car loans are?

I was making payment arrangements a few minutes ago with Chrysler Financial. the payment was just due yesterday and they are already calling. What happened to the grace period? Anyways the guy was very nice and told me that if i wasn't aware that it accrued interest daily at like $10.00 per day. And that the later i pay, the more it gains and the more of the payment goes to interest instead of principal. I have no idea where my contract is but i'm sure that is what it will say, i just didn't understand that when we bought the vehicle. It was like a $36,000.00 vehicle. Anyways i was just wandering if that is how car loans usually work?

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Asked by Anonymous at 2:10 PM on May. 7, 2009 in Money & Work

Answers (7)
  • No mine isnt like that at all. We use Citizens auto finance, and i am usually a few days late and we never get charges that. and they dont call either. but then again chrysler isnt doign very good now anyway, they probally need the $$

    Answer by RhiannonHunt at 2:14 PM on May. 7, 2009

  • No... you pay a set interest amount for your credit score at the time. so say you have 10% interest on the loan, then thats all you pay... There should not be additional interest because you are late. Now There could be a late fee but 10 dollars a day for a late fee is to much.

    Answer by soonmommyof3 at 2:14 PM on May. 7, 2009

  • Ugh, more and more lately it seems. I have Chase Auto and they call ON THE DAY that my payment is due. Once I was five days late, and they charged late fees. My old car company also did that too.

    Answer by ajguinn at 2:15 PM on May. 7, 2009

  • My guess is that he was telling you that to scare you into making the payment immediately. They could be charging a late fee, but there is no way that $10 a day in late fees would be legal. We use Chrysler Financial too, but since we haven't been late, I'm not aware of what the fees actually are. Did you know that you can make the payment online? That way even if you pay it at the last minute, it will go through. Chrysler the car company is in bankruptcy, but Chrysler Financial isn't. It would seem that they are making sure they get paid. They have even called our house to try to get us to do something about my SIL's late payment. We aren't on her loan, we don't even live in the same state, but they managed to track us down anyways. Since I couldn't care less if her car gets repo'd, I just told them they were out of luck with me.

    Answer by slw123 at 3:09 PM on May. 7, 2009

  • Yes interest accrues daily. It does not change the amount of your payment but the amount that goes to principle vs interest will always vary unless you pay on the exact same day every month. Even then it will change because the lower the principle balance the less interest. You do have 10 day before a late payment will be charged. You have 30 days before it will negatively affect your credit score. I know my auto payment shows me the break down every month, check it out you will see the amount going to interest vs principal is always different.

    Answer by Anonymous at 3:29 PM on May. 7, 2009

  • Let me add to everyone else, he wasn't saying she would be paying $10 a day in late fees, that isn't it at all. The payment amount would not change just more of the normal payment would be put towards interest. If you pay the next month on time you will see more of that payment go towards tthe principal because there were fewer days for interest to accumulate between the pay dates.

    Answer by Anonymous at 3:37 PM on May. 7, 2009

  • some are trying to call ahead to cut off any potentional problems. Maybe your slow at work so will be 10 days late. However if he could offer a skip a pay it would make all the difference. I think companies are trying to do that to avoid anymore bankruptcies, repos, foreclosures.

    Answer by Anonymous at 4:48 PM on May. 7, 2009

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