a new finance law, initiated after the mortgage implosion, attempted to suck in all forms of finance loans with little regard and understanding of how a car loan actually works.
It was as if the politicians in Washington had never been to a car lot, much less ever had an auto loan. Makes you wonder huh? The truth is there are already so many federally mandated regulations on car dealers and auto finance banks that customers regularly complain that “buying a car is worse than buying a house” when it comes to paperwork.
The bank sets the rate the dealer prints on the contract. The bank calls the car buyer to verify the information on the car loan application and the features of the car, after the dealer has already provided copies of ss cards, driver’s licenses, pay stubs, rent receipts and employer’s phone numbers. This process is for everyone regardless of their 720 credit score and too bad if you are a busy business owner or high-powered executive, if you cop an attitude on the phone with mS. checkuponyou, this minimum wage clerk can red line your loan.
The contract you sign clearly states across the top: SIMPLE INTEREST CONTRACT or COMPOUNDED INTEREST CONTRACT. It’s one of the two. In Nevada, as in several other states, the SIMPLE INTEREST CONTRACT is the law. This SIMPLE INTEREST clause means when you pay off the loan, regardless of how long or short you are in the finance plan, the interest stops that day. The interest is calculated daily, called a “per deim per day”, so you will not pay additional interest, penalties or fees, for paying the car loan note off early.
A COMPOUNDED INTEREST is just that, the interest is calculated for the term and you owe all of it, regardless of when you pay off the car loan.
Furthermore, the total amount of interest you will pay is clearly marked on the contract, in the four squares along the top of the page, and if you don’t speak English as your primary language, Nevada law requires you to have a contract printed in SPANISH. However, the banks will also require you sign the same paperwork in English, as they don’t honor the Spanish copy, that’s strictly for your protection to be sure both contracts say the same thing.
In addition, many dealerships and banks now require fingerprinting of the customer signing the documents to protect against identity theft and vehicle loan fraud by persons with fake social security and id cards.
If that weren’t enough transparency and consumer/bank protection, dealers are placing GPS and remote kill switches in cars to be sure the consumer pays the note on time and the bank gets their car back in the event you try to leave town with their wheels. The “on time” system will not allow the car to start if the payment is late. The GPS, well it tells the tracker where the car is, 24/7/365 coast to coast.
SO after the new Finance law designed to “protect” the consumer and keep the dealer and bank honest, was revealed to be written by people who had never worked in a car dealership, had an auto loan or understood the basic principles of extending credit as a retailer, lawmakers excluded the car dealers from the new finance law only after recognizing the proposed additional regulations were redundant and counter-productive to business relations for an industry already under seige and barely afloat.
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If you need any other car buying, selling, trading or financing assistance on any new or used vehicle, please do not hesitate to email me at sarahlee@mycarlady.com,mvides422@gmail.com,carlady@cox.net or give me a call; 702-521-7546 I’m here to help you with any of your automotive needs and advice is free.
Sarah Lee is an automotive executive with 20+ years of experience. She writes about Cars, and is a staunch consumer advocate on car related subjects. Her company: MY CARLADY is a car buyer’s service committed to getting you the best deal on your next new or pre-owned vehicle. You can reach her at CAR DEALS
