Question

Can I only pay my principle on my car note and not be penalized?

Forum|Forum|7 years ago
October 5, 2018
25 replies
0 views

I pay a little over $300 a month and in 10 months I've only contributed $500 towards the loan amount...>:-[

Car Loans

When making payments to the principal by paying more on each payment You MUST specify that you want the extra money to go the principal or they will add it to whatever they want. Like interest or late payment fees. Always specify!!!

J

jt-of-sw-fl

your note agreement would tell you. Should not normally be a penalty for paying extra each month. this only makes sense though if you dont carry a balance on higher interest rate credit cards. payoff the cards 1st.

B

Bob3

Stop borrowing money. If you just think about it you are giving away your money. Save up and buy a car.

A

Amedina1490

This thread is pretty helpful, however, what I have gathered somewhat confuses me in regards to my auto loan payments.

For a 5 figure loan, my minimum payment began at $350/mo for a 3.3% rate starting November of 2017. I have steadily paid $550 each month since I started and my minimum payment has been $0 for a while. Obviously I still have a balance and my payment has not changed, but that doesn't necessarily mean my $550 is 100% principal right? How is the principal/interest payment calculated then? Am I only paying interest at that point and a really good chunk of my payment is principal now? I guess I just really don't understand how my lender changed my min. payment from $350 to $0.

D

dcland

You must pay the minimum due. This usually includes a little bit of principle and lot of interest since auto loans are usually front loaded.
As far as paying any additional towards only the principle, you'd have to talk to your lender or read through your contract. With my loan for example, any additional payment I make is applied to next month's payment up to 2 months before being applied to the principle. However, if I call them and make a large payment (common during tax return season) it will all apply directly to the principle.

B

Bailsmb

When you send in extra payments, you need to make sure how the lender applies the extra funds. They may apply it towards your next payment and not toward the principal only. You have to be very specific with some lenders. They don’t always apply the overage to principal.

L

Lacayo

Yes, if you make the minimum payment, then you can pay some of the principle balance. But you have to make sure you specify when you make the payment you want it going to the principle. If not they will put most of it to the interest

C

Cody11_2

You must have a higher interest rate. I think the smartest move would be to let go of the ego of have a newer car.. sell the car and buy a much cheaper car. It will save you so much money in the long run.

M

Moretowealththanmoney

In a short answer, no. You have to make the minimum payment. Then pay extra and tell them, specifically, that the extra payment is to go towards the principle. Always do the payments separate so you can see and make sure it is going toward the principle.

tygrtchr

Each of your payments contains an amount for principal and interest. It is perfectly fine to pay MORE than the minimum payment, but you can't pay less and specify that it is for the principal only. Adding even $25 month extra will knock the debt down early since the $25 goes toward the principal. The more extra you pay per month, the faster that car is paid off.

S

Saiquan27

Dont get a loan from the car dealership. Get a loan through a bank yourself and then go purchase the car. Rates are usually lower that way.

Show more replies