I've recently purchased a new car and am quite confused about the total loan amount and monthly repayments that I have to make. While I know that this may sound like something I should be in complete understanding of before handing over any money, let me explain why it is not so simple.
I live in Thailand and while I can speak Thai on a basic level, I am still learning.
The car was purchased from a main dealership for the book price of 699,000 Thai baht.
I put a 10% down payment on it, which would take the total loan amount to what I thought was 630,000 baht.
The finance period is 72 months, and the interest rate is 3.8%. There is no final payment.
This initially led me to assume that I would be paying 3.8% on the full 630,000 baht, but then somebody explained that the interest is compounded, so that means that in the end I will be paying nearly 25% interest by the end of the term.
Anyway, my issue is that I have been told to make payments of 11,084 Baht per month.
The 11,084 includes 7% VAT, so that would be 10,308.12 without.
Basically, I don't understand the mathematics behind it, there must be something simple I am missing here.
So after all that, my question is, is this correct? If so, can somebody explain it to me please so that I can sleep easier at night!