Save (virtually) nothing with Bank of America’s auto loan

Susan Tompor had a great article in the Detroit Free Press about banks getting back into the auto lending business. She noted that Bank of America was offering a stellar-sounding rate on vehicles:

Bank of America has a low rate of 2.89% in Michigan on new car loans of up to 60 months. The loan has a $200 fee and the borrower must have excellent credit.

Now, that 2.89% “low” rate does sound great. But how does the math work?

Here’s an example. Let’s say we take a plain old car loan, with no money down and no trade-in, for $20,000. Pay Bank of America’s $200 fee and the rate, and you end up with a monthly payment of $383.38. In the end, you’ll pay $21,400 for that new car when the loan is paid off (we’re using our handy auto loan calculator for these numbers).

Now, take that same $20,000 auto loan to American 1, where you pay no fees but you pay a slightly higher interest rate of 3.49% at our low end. That leads to a montly payment of $385.57 – two whole dollars more expensive than BoA’s payment. In the end? You’ll pay $21,200 for that vehicle, which is exactly $200 – or the cost of that BoA fee – less in total.

Isn’t that something?

Tompor quotes a BoA representative who sounds giddy to get back into auto lending:

Doug Melton, direct-to-consumer underwriting manager for Bank of America, said the bank is optimistic about car lending in 2011 and is aiming to offer competitive rates for loans on new and used vehicles and lease buyouts.

“There are a lot of great customers out there looking for new cars, used cars and looking for financing,” he said.

“Competitive” being the operative word. The most you’ll save is $2 a month, no matter how competitive that rate looks compared with ours or anyone else’s.

Isn’t it better to do business with a local institution who charges no fees and is a phone call away when you need service?

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1 Response to “Save (virtually) nothing with Bank of America’s auto loan”


  1. 1 used car loans us October 27, 2011 at 7:03 am

    Thank you for your information and response.


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