I’m about to purchase a car and I have a question about how financing actually works. Like with most of my auto purchases, I am leaning towards paying it in cash but since my wife doesn’t have any auto history on her credit report so I was thinking about taking the loan out under her name. Is there any benefit to taking out the loan and paying it off immediately? My question is, if say the loan is for $30,000 and the total interest on it at 2.5% is an additional $1,945, is that total just added to the principal and spread out over the life of the loan? Would my payoff be $31,945 or would it be $30,000 + $54 (monthly interest charge)?
If the goal is to build credit history for auto, it’s not just getting a loan and paying it off immediately. Your credit history is just that - establishing a history (duration) and a repayment pattern. I’m simplifying it of course, but there’s a lot to building up a history. Here’s a starting point… happy reading
Ok got it. So interest is front loaded. Are all auto loans amortized? Is this industry standard or can different banks structure their loans differently?
