Does anyone own a 2008 Chevrolet Tahoe that is financed?

Question

I am thinking of getting a new 2008 Chevrolet Tahoe financed. I was just wondering, what are your monthly payments and the interest rate is, and how long your term is. Thanks.

Answer 1

How's your credit?  The price of the Tahoe is obviously important, but the payments are also determined by the interest rate, which is determined by the quality of your credit.

If your credit is flawless, expect a rate in the neighborhood of six percent for a five year loan, a bit higher for six years, even higher for seven years or more.  If your credit is not flawless, then the rate will be higher.

To approximate a payment, do the following:

Take the selling price and add twelve percent.  This will cover taxes and dealer fees and registration.  In some states, this will be less, as some states have very low registration fees and others have little or no sales tax.  Adjust for your location.

Subtract the above total by your down payment.  You now have an amount financed.

Guess at your rate, based on your score and credit history.  Divide this by two.

Multiply the above (half of your expected rate) by the number of years you expect the loan to be.

As an example, if you can get six percent, divide by two, which equals three, and multiply by years (5), which equals fifteen.  Multiply this by the amount financed.  Add this result to the amount financed.  Divide by the term in months.  Viola!  You have a payment.

Example:

Sales price fifty thousand.  Add twelve percent equals fifty six thousand.  Subtract down of ten thousand equals forty six thousand.

Multiply by fifteen percent (0.15) equals six thousand nine hundred.  Add to amount financed equals fifty two thousand nine hundred.  Divide that by the term in months (five years = 60) and you get a payment of eight eighty two (appx.).

The reason you divide the APR by half is that the balance of the loan goes down each time you make a payment, and eventually gets close to zero for the last payment.  So, the average balance of the loan is about half the original amount finance.  Since the interest is a bigger chunk of the first payment that it is of the last, the divide by two gets you a lower payment than the real one, but it provides a good estimate.

Happy hunting!