High interest rates with closed financing: Don’t get stuck with a 29.9% interest rate for the duration of the loan or lease which is sometimes up to 5 years! Some dealers prey specifically on people with this tactic as it is very profitable. Our goal is to sell you multiple vehicles over your life time not make your vehicle unaffordable and have you default on the loan or lease, repossess it and repeat with another client. BE SMART AND BE CAREFUL.
Closed Financing & Precomputed Interest: These are quite common arrangements within house finance options. Although not always inherently negative it is important that you know that your loan or lease is structured this way before signing the dotted line. Some in house dealers hide this in the fine print, we do not, everything is explained to you and in most cases you choose which route you wish to take.
Closed financing: Generally means there is a penalty to exiting the your contract and will have to pay a predetermined penalty $ amount for the remaining term length. For example: if you had a 3 year term, your penalty is $100 per month and you had completed only 1 year of payments, you would then have to pay $100 x 24 months = $2400 to exit the finance/lease contract.
Precomputed Interest: You are responsible to pay off the full amount of interest that would have accrued during the agreed upon term of your loan or lease, even if you pay it off faster or all at once. Example: Vehicle cost $10,000, Duration of the loan 36 months, 15% interest rate, if you had paid 13 months and had 13 left you would have to pay the remaining interest of $1239.76 to exit the contract.
