HSBC Auto Financing Taking more than 50% of my payment for interest. Ripoff Carol Stream San Diego California
HSBC will not tell me my interest rate. they will not refinance me at lower rate, even after 2 years of no late payments. My truck stared at $22,000.00 and I now owe $20,552.39. Why??
Elizabeth
New Port Richey, Florida
U.S.A.
4 Updates & Rebuttals
Heather
Murphy,Texas,
U.S.A.
Arm yourself
#5Consumer Suggestion
Thu, May 04, 2006
You have the right to know your interest rate. Demand it in writing via certified mail.
Once obtained, you can calculate what your payments go to toward on a month-by-month basis by plugging some simple information into an Amortization Schedule (a simple template can be obtained from Microsoft if you use Excel).
You just need to plug in the initial loan amount, the interest rate, the date the loan started and how many payments you make each year. It will then give you a detailed schedule of how you're paying off your principal and interest.
D
-,Oklahoma,
U.S.A.
That's how loans work
#5Consumer Comment
Thu, May 04, 2006
All loans, whether your credit is good or bad, are like that. You start off by paying mostly the interest first, and after thats paid, you pay back on the principal. It works out so that you pay, just for example, 90% interest and 10% principal in the first two years or so, and the percentages gradually flip-flop toward the end. This is how the banks ensure they get paid their interest. This is nothing unusual. It's the same way with mortgages. Mstly interest in the first 15 years or so, then mostly principal toward the end(which is ok, 'cause you get to deduct interest paid on mortgage from income taxes :-)~)
King
Some Place No Doubt Kingly,Delaware,
U.S.A.
Advice
#5Consumer Comment
Thu, May 04, 2006
There is indeed a law, and a practice HSBC does take part in, that CLEARLY discloses the interest rate on the loan AS WELL AS the term of the loan.
If you're making minimum payments, with a fat interest rate, most of it will be interest. Thats how a sub-prime lender makes its profit (If you don't like the interest rate, don't sign the loan documentation. And don't say something like well they didn't show it to me when I signed. That would make you appear insanely crazy just because you signed for a "mystery" interest-rate.).
My suggestion to you is to re-structure the loan and attempt to get a lower interest-rate.
Dave
New Westminster,British Columbia,
Canada
Loan Math makes some sense
#5Consumer Suggestion
Tue, April 25, 2006
Using your numbers, and guessing at a 15% interest rate, it looks like you have a 10 year loan.
If so, that's how fast the principal gets paid off at the start of a 10 year loan.
Of course, they SHOULD tell you the interest rate, and I think it's the law that they do. They also have to tell you the term of the loan.
I find it strange, and perhaps illegal, that they wouldn't tell you basics like interest rate but would tell you the amount outstanding.
Can you find the original contract you signed?