http://www.kenniffonline.com/toyota-profits-2009/
Is a 2009 Toyota Prius Hybrid really only $22,750 MSRP?
I am looking at the basic Hybrid with only the standard features. I want a 72 month payment plan but that included $420 monthly payments. According to this Toyota makes a little over $7,000 in profit selling one car. Does that seem accurate?
Hi,
first off, yes the MSRP, including destination, is $22,750 for a 2009 Prius with no options.
I do not want this to come across in any way other than I’m trying to help, so stay with me and I’ll walk through the basics.
I’m guessing that you did a payment calculator on the Toyota website to come up with the $420 each month for 72 months, with an interest rate of 10%, no down payment and no trade-in. So are you asking if the interest payments equal $7000?
If you finance a vehicle for 6 years, then yes, there would probably be $7000 in interest payments, figuring roughly $1000 per year in interest, possibly more if you have a higher interest rate than 10%. That has nothing to do with the price of the vehicle (at this level of cost for a new vehicle). Used vehicles will normally carry a higher rate than new.
However, you are only paying interest on the outstanding balance, so you will actually see your monthly interest amount, not the principal (the total price of the vehicle itself), going down after you’ve paid enough of the principal down.
So unless an automatic payment calculator has told you the total interest will be $7000, it probably will be less (although I have not taken the time to calculate the actual interest as your principal decreases).
If you have an issue with Toyota making money on financing your vehicle, remember that you can finance with anyone you want. Get financing from another bank before you sign your papers at the dealership and just tell them what your rate is and who it’s with. Sometimes they can beat the rate you already have, somtimes not.
If you think that Toyota is somehow making too much money on your financing, go somewhere else and ask them for the details before you sign the paperwork for the note.
Also, plug in your cost, loan term and interest rate on other manufacturer websites to see what they will charge you. The shorter you can get the term, the more you can put down, and the less you owe on any trade-in (if there is one) will all add up to a lower interest rate.
48 months will be a lower rate than 60 or 72 months. Putting down 10-20% will lower your payments because you are paying down some of that principal, so there is less to charge you interest on from day one.
These are basics for any bank, it doesn’t matter who you get your financing with. Good luck.
90 seconds at 9am: NZ bank profits slump; Toyota crisis deepens; Dow falls