Is it considered predatory lending if a bank takes more than its percentage of fiance out of each payment .?

Question

if they are trying to get most of there financing up front and leave the balance of the loan to be paid on the tail end so that the actual balance is not paid until fiance charges are paid . leaving you upside down if you trade in a vehicle before it is paid off!

Answer 1

Auto finance is what I do for a living and that's the way auto loans work, they are front end loaded so on a normal 60 month loan people are not in a equity position until the 42-44th month.

And no it's not considered predatory lending.

Answer 2

It's called "amortization". Look it up.

Answer 3

Interest is always the largest part of your payment at the beginning of your loan.  As time goes by, the interest goes down and you start to pay on the principal.

Just the way it goes.

Answer 4

Yep, that's the way the math on loans work.  Your principal balance is higher at the start, so your interest payments are higher as well.

Also, auto loans frequently go upside down.  New cars lose a lot of resale value during the first couple years or so.

Answer 5

Why do so many people misunderstand loans? (not referring to answers, but other similar questions)

Interest is calculated based on a monthly percent of your unpaid balance (not a percentage of your payment).  For a fixed rate loan that percentage is always constant. But the dollars (or your units of currency) of interest per payment starts out highest for your first payment and decreases each payment as your remaining balance decreases.

That is not predatory, that is how interest is calculated.  If you are upside down on your loan, it is because you did not make enough down payment or your loan is too long (too many years).  That is the price you pay for not paying enough up front or per month.