Comments on: Volkswagen targets stupid people, tries to rip them off

By: Mel

Mel — Wed, 08 Jul 2009 15:09:35 +0000

Well, I’d probably take the option to save some money long term (ie, bank that monthly payment less the $25 fee into my savings account) – but then, I’m not paying any interest (go 0% financing!) for the whole life of the loan, so my reasoning’s a little different!

By: Thank you VW for my good credit.

Thank you VW for my good credit. — Thu, 09 Oct 2008 11:24:20 +0000

Skip a payment should be done to save your credit.
A few months of things being difficult shouldn’t be turned into 7 YEARS of credit problems.

What a bunch of narrow sighted morons; those who say the skip a
payment program is no good as a blanket one size fits all statement.

I have a loan with VW.
After 16 months with them they have never mailed me an offer to skip a payment.

I have a 36 month 0% loan (yes 0%).
Payment is $800+.
If my payment was $400 and 5% this letter would be no different.

After going through a nightmare home sale (2+ years of legal BS)
I needed to cut down my monthly bills for for 2-3 months.
My monthly home costs when from $2550 to $4650
(NO THIS WAS NOT AN ARM LOAN OR ANY OTHER SUCH BS!).
After almost two years this went from hard to almost impossible.

I called VW to ask them if they had any kind of program to skip a payment.
They did. Pay 10 months on time and you can skip one or two payments (your choice).
Fee is $25 per payment.
I took the two payment option.
BTW, I also called Chase and Citi Bank about other loans. They told me to call their collection departments after I was 90 and 60 days late! I then called Home Street Bank on my home loans and they told me to call back after I was more than 90 days late and less than 120 days late!
Thanks!!!

Now, for the narrow minded morons here who can’t
see the other side of this “payment skip” option:
If you are going to be late, and receive a mark on your credit
(VERY COSTLY IN THE LONG RUN!), or pay $25 to skip a payment,
which is the better choice?!

I have credit scores of 722, 728, & 741.
I monitor my credit almost daily and have since I was 19
(back in the days of TRW’s “Credentials” monitoring service).
Paying $25 per payment skipped with VW has helped me keep these scores.
The next time I buy a property, or do a re-fi, how much will I save,
due to a lower APR by paying VW $25 to skip a payment and avoiding
two late marks on my perfect credit (gasp), will I save?
If I had missed two payments (30 and 60 day late marks!) my credit scores would have dropped under 700 and my interest rate would increase enough on future loans to cost me hundreds (PER MONTH) for seven years!
If I was doing a re-fi and had a 30 and 60 day late marks paying $2500 to remove each would be a deal. Paying a proactive $25 fee to avoid this was money well spent (more like invested).

Skipping two payments kept 30 and 60 day late marks
off of my credit report and cost me $25 each!

Skip a payment because you want to blow the money on non essential shopping or other BS?
Stupid.
Skip it so you can keep your credit and keep your rates low on future loans?
COMMON SENSE.

My next home loan will be 6% or less and my next car loan will be 0% (or close to it).
It cost me $25 to keep these options open. Thank you VW.

By: Dan

Dan — Wed, 13 Aug 2008 22:45:10 +0000

Let’s not forget that when it comes to car loans, any extra interest you accrue takes into account the original loan amount (the principal) when calculating how much extra interest they tack on, regardless of if you’ve only got a few months left on that loan.

By: Puneet Saini

Puneet Saini — Wed, 23 Jan 2008 00:40:09 +0000

This article is an eye-opener. It’s funny how naive some firms think their customers are.

By: Trey

Trey — Wed, 16 Jan 2008 19:56:18 +0000

For those who think paying cash for a car/house is a good idea…
7% APR car loan or 5.5% APR home mortgage
8% APY brokerage account
$30,000.00 car
If you can make payments and keep your capital you are still making money (not much). Unless your brokerage APY drops below the loans APR.

By: stupid volkswagen

stupid volkswagen — Fri, 13 Jul 2007 01:34:47 +0000

There was one black volkswagen driving fast and I just passed that stupid car with my Audi. On a signal light, we stopped. As soon as the light turns green, that stupid car just tried to ran off. Of course, I yielded. That car is not worth to race. I then got behind him and just passed so easily. That car tried to follow me, but he couldn’t. Of course. Your car is volkswagen. Not Audi. Stupid. Ha Ha Ha.

By: Jeff Hudson

Jeff Hudson — Tue, 26 Dec 2006 22:03:17 +0000

The interest examples above are not correct. You are only paying additional interest on the additional principal balance not paid by skipping the payment, not the whole loan balance. As an example, say the the payment is $217 and the interest rate was 6%. If you paid the $217 payment, some would go to principal and most would go to interest. To make an easier illustration, let’s assume you paid additional interest on the WHOLE payment of $217. The monthly interest on $217 @ 6% APR is $1.09 (6% annually is .5% monthly). Therefore, if you skipped this payment, you would pay an additional $1.09 per month over the remainder of the loan. If the APR is 9%, then the additional monthly interest would be $1.63. Therefore, one would have to decide if skipping the payment is worth the $25 fee, plus the additional dollar or two per month that would accrue.

The example in #42 above is simply not accurate. It assumes you’re paying additional interest on the whole loan. You didn’t expect the loan to be interest free, did you?

By: anacoluthia

anacoluthia — Fri, 22 Dec 2006 21:27:52 +0000

It is very common. I recieved one of these a few years ago, when I was younger and poorer and had to finance my used car. Except the fee was $40 and my payment was only $165… I found it insulting

By: Carlin

Carlin — Fri, 15 Dec 2006 00:31:23 +0000

#42 – I used to work in collections for a bank and they taught us the same thing. We should use it as a collection tactic that you are incurring $4.35 a day if you don’t pay. It’s not lying because it is in fact true, you are incurring that much, but it is misleading. You will incur almost as much interest even if you make your payment, because the amount applied to principal isn’t enough to drastically drop the interest per day. The bulk of that interest would be incurred even if they made their payments on time. For simplicity, let’s say they make their first payment on time and $200 goes to principal. This reduces their balance to $17,650. We’ll also assume they skip the next payment. So for the 60 days, using the same assumptions above, they would incur $4.30 a day, so $258 total, which is $3 less than above. What people don’t understand and what kills them is the interest that accumulates on this $3. Most people assume that if they make the stated payment each month that they will pay off the loan. They assume that 12 payments of $300 means they need to pay back $3600 by the end of the 12 months. This is incorrect. That $300 payment assumes that each payment is made on a specific day, usually your due date. If you pay in your grace period every single time (5 to 10 days late, whatever), your last payment is going to be $300 PLUS the extra interest incurred because your principal balance didn’t drop when it should have, plus the interest incurred on this extra interest. Another thing that happens with deferring payments is that sometimes your loan isn’t extended. Let’s say you have 12 payments again and you skip one. Some banks don’t add another payment date to your loan repayment schedule, so if your last payment was supposed to be October 1st, and you skip one, you don’t get another payment on November 1st, you instead have your normal October 1st payment PLUS the payment you skipped due on October 1st. Your last due date is your last due date, regardless of how much is owed. That is the date when the balance of the loan is due, no matter what it is. A lot of people had a tough time with that, because they thought if they made their monthly payment they could keep paying like that indefinitely, which wasn’t the case. When your time is up, your time is up.

By: Financial Success

Financial Success — Tue, 05 Dec 2006 04:01:32 +0000

I actually work for Bank of America and every year this holiday season, we get a flood of phone calls in our auto loan department about “taking advantage” of payment deferments for auto loans. This is not something we offer for the “holiday” season or approve of, but because customers have been used to their other auto loan companies, they expect us to do so. Now, let’s have a little lesson about how interest in an auto loan is calculated (which is why I don’t like them).

A lot of people seem to think that interest is based on your payment amount. That is wrong – it just so happens a little interest comes out of your payment, but that’s not how the finance (interest) charges are calculated.

Let’s say hypothetically, it’s December 1st and you have a payment due today. Such predatory bank wants to offer you a payment deferment for that month until the first of January. Let’s also say hypothetically that you have a loan balance of $17,850.00 and your interest rate is around 8.90%

Well, how interest is calculated on the loan is by taking the
17850.00 * 8.90% or 0.0890 which gives you a figured of 1588.65 this number is then divided by 365 days in the year. So you take 1588.65 / 365 which gives you a sum of $4.35 being charged to you in interest every day until you make your next payment.

Now, bear in mind you haven’t made a payment since Nov 1, so you’ve been accruing $4.35 per day until December 1st.

Now, they are offering to defer that payment where interest keeps accruing until your payment in January. So, when you make your next payment, you will accrue 60 days worth of interest totalling a A WHOPPPING … $261 in interest/finance charges.

If consumers knew this or could comprehend this the first time around, you’d see less people going for these deferments. Not to mention you pay additional interest at the end of the loan since it was deferred.

Not smart. Just not smart. Yet, since I deal with customers on a daily basis, I get the brunt of this, but hey I’m not the one who begged to get a payment deferred. It’s not advertised by us, but people want it anyway then are surprised later on.

READ THE FINE PRINT!