FAQs

  1. How are finance charges calculated?
  2. How is my payment divided between principal and finance charges?
  3. What is a grace period?
  4. Can I have my payment automatically deducted from a checking or savings account each month?
  5. If I send a check for more than my monthly payment, how will the additional amount be applied to my account?
  6. Can I refinance my contract with BAAC to reduce my payments and/or interest rate?
  7. The last coupon in my book does not have a payment amount. Do I send in the regular monthly payment amount?
  8. Why is my final payment larger than my regular monthly payment amount?

 

1. How are finance charges calculated?

All retail installment contracts with BAAC are "simple interest" contracts.  This means that finance charges, often referred to as "interest" accrue daily, beginning on the date of your contract.  Each time you make a payment, the payment amount is applied first to accrued finance charges.  The amount of finance charge that accrues is calculated by multiplying the number of days between the last payment and the next payment by your individual daily per diem.  The per diem is the amount of finance charge incurred "per day." The formula is as follows:

Current principal balance multiplied by your finance charge rate and divided by 365 (number of days in a year)

Finance charge example:
If your account has a current principal balance of ,000.00 and a finance charge rate of 10%, your daily per diem is approximately .74, calculated from (,000.00) x (.10) / 365. This means that .74 in finance charges accrue each day.  If a payment was last received on 6/1/07 and another was received on 7/1/07, thirty days of finance charges accrue during that time.  Therefore, .19 of a payment would be applied first to these accrued finance charges and the remainder to other amounts owed, including principal. If the payment in this example was 0.00, .19 would be applied to finance charges, and the remaining 7.81 would be applied to the principal balance.
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2. How is my payment divided between principal and finance charges?

Payments are applied in accordance with any applicable law.  Absent any applicable law, payments are applied first toward finance charges and to other amounts owed, including any late charges, principal, or other fees.  When the principal balance is reduced with a payment, the daily per diem will also decrease.  Therefore, the amount of finance charges that accrue daily will decrease each time a payment is made, as long as the principal balance is reduced with each payment.  This is why the amount of finance charge paid at the beginning of a contract is higher than the amount paid at the end of a contract.
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3. What is a grace period?

A grace period is the time after the payment is due and before a late charge is assessed. Grace periods vary based on applicable law, which depends on where you purchased your vehicle and signed your retail installment contract. We recommend that you mail your payment 7-10 days in advance to allow for timely receipt.  Despite grace periods, your monthly payment is due by the due date.
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4. Can I have my payment automatically deducted from a checking or savings account each month?

Once you register for our ACH Program, you can set up recurring payments to be deducted from your checking or savings account, or charged to a credit or debit card.
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5. If I send a check for more than my monthly payment, how will the additional amount be applied to my account?

If you pay more than your monthly payment amount, we will automatically apply the additional amount to any fees owed and then to future payments, up to the next 3 payments. We will apply any amounts remaining after that to reduce the principal balance owed on your account.
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6. Can I refinance my contract with BAAC to reduce my payments and/or interest rate?

BAAC does not offer refinancing at this time.  Should you pursue refinancing with another financial institution, there is no penalty for paying off your account early.
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7. The last coupon in my book does not have a payment amount. Do I send in the regular monthly payment amount?

The last coupon in your book does not have a payment amount because that amount may vary depending on your payment history. As you approach your final payment, please contact our Customer Service Department at (855) for the amount required to pay off your account in full with your last payment.
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8. Why is my final payment larger than my regular monthly payment amount?

The amount of your final scheduled payment will vary depending on your payment history.  The final payment amount assumes you make your remaining payments on the scheduled due date.  The final payment amount includes any amount past due, plus any other unpaid fees that may have been previously assessed to your account.  This amount is also impacted by your payment history. Your account is based on a "simple interest" retail installment contract.  This means that finance charges, or "interest," accrue on your account each day based on the unpaid principal balance. If you regularly made payments before your due date, fewer finance charges would have accrued during the term of your account.  If you regularly made payments after your due date, more finance charges would have accrued and the final scheduled payment is likely larger than the regularly scheduled amount.
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