DRIVE FINANACIAL SERVICES - Santander Consumer Finance Santander Never Ending Loan, Internet

Based on your description of your loan balance, it sounds like you got stuck with the type of loan that used to be called a "rule of 78's" or "ADD ON" type loan. What that means is the lender adds all the interest that is due throughout the term of the loan onto your principal balance the moment you sign the contract. The worst part about this is the fees can still be added to the loan if you pay late - even by one day.

For example, if you buy a $12,000 vehicle and your interest throughout the term is another $15,000 (for example), then your payments are actually used to reduce the interest first.  You don't pay off any of the principal balance until the last few years of the loan.  If you go to sell the car, you are upside down the entire period of the loan.

This is a completely different type of loan than the one you get from a credit union where you pay interest and principal each month (a simple interest loan). In a simple interest loan, most of your payment actually reduces the principal and the interest is a small portion of the loan. If you look at an amortization schedule of the loan you are planning to obtain, you will immediately see the difference.

How do you know what type of loan you have - read your contract before you sign it. Most 'Buy Here Pay Here' type places use these type of Add On loans. They might call it by different names, but when you read the terms you will know exactly what you are getting into by signing the contract.  These type of loans are designed to keep you in debt. The best solution when you are in one: Pay off the loan and don't get another one. Don't trade in a vehicle with this type of loan. It will compound your situation - making a bad loan a worse loan because now you carry the debt from this vehicle to the next vehicle AND you have to pay the note for that vehicle too. Its a terrible cycle. I know that sounds like I am not understanding, but the worst solution is to have the car repo'ed and then owe on the loan anyway!

If you pay off this car and you decide to get another vehicle. Then go to a credit union and get a simple interest loan. If you don't qualify for it, buy a beater for cash and drive it until you can qualify for a simple interest loan or until you don't need a loan at all.

I don't work for a bank. I had one of these type loans 20 yrs ago right after my divorce and learned this lesson the hard way. I have never had one since.

Since my original response, I've done a little thinking about this.  You seemed to be surprised this loan is taking so long to pay off, right?  Lets see...the contract stated the price of the F-350, the total amount in dollars of interest, the Annual Percentage Rate, the total amount financed AND the amount of each payment, the number of payments and their due date.

So then, how can you be so shocked as to the number of payments left?  How? I'll tell you how, YOU DIDN'T READ THE CONTRACT before you signed it, did you?  Warning people that "you may be with them longer than you really want to" is nothing short of stupid.  If someone reads the contract BEFORE signing it, then they can decide at that point if they want to go thru with the deal! 

This is incredible.  You enter into this five figure deal and apparently don't have a clue as to how many payments you have! 

Now, lets get even more incredible.  I've blasted you because you need it.  You did something very stupid.  Why are you messing around with a sub-prime lender?  Because YOU have bad credit and its bad only because YOU made it that way.  But, that same YOU can change all this and say "good-bye" to sub-prime lenders forever by resolving to pay your bills on time, everytime.  If you don't have enough income coming in, there's only ONE way to fix that which means you need to take a part time job or maybe even a second job!  Over time, you will never, ever need to deal with one of these places with their high interest rates and generally high mileage, junk cars.  At this point, you can either choose to reply with a whole list of names and eventually accuse me of working for them.  Or you can do the smart thing and make today the turning point in your life.  I am hoping you will forever remember this reply and how I used the word "stupid".  Better yet, I hope you use this as motivation as you become a financially responsible and savy buyer.

He is a known bank backer and likes to kick people when they are down, you can look at every post on here and see he is on them putting everybody down and telling them they are the ones that are wrong and the big companies that are unwilling to work with their customers only because they want to charge late fees.  One of these days I hope Jim will goe through what hundres of thousands of people are going through right now.