Some loans only penalize you if you pay off in the first 6 or 12 months. My car loan is like this. After the first 6 months, I could lump sum the remainder and come out ahead in the interest department. The first 6 months is just to make sure the lender is going to escape with a minimal amt. of profit. A loan can be written a lot of different ways, depends on the lender.
If you want to pay if off early send in extra money with each payment, that way it comes off your principal. You can call your bank and get your payoff amount if you have the cash to do it right away.
- Oct 28, 1999
- 62,484
- 8,345
- 126
Stallion, you are correct that the monthly payments never go down, but if he is getting charged 19%+ a year, then sitting on that money will not "save" him any money.
Look on a car loan paper. There are two figures on there. One figure is what the principle is. The other is what you would *actually* pay if you were to make the standard monthly payments over the course of the loan.
If you take out a $17,000 loan at 10% interest for 5 years, your *actual* cost would be around $21,000 if you paid the set amount every month for the 60 months.
Using totally generic numbers (because I'm too lazy to actually do the math
), if you were save up that money over the course of the year and pay it off in 12 months, your *actual* cost might only be $19,000.
How many investments will get you $2000 on a $17,000 in 12 months time GUARANTEED?
This is with a 10% interest rate. Double those savings for Vallhalla.
Look on a car loan paper. There are two figures on there. One figure is what the principle is. The other is what you would *actually* pay if you were to make the standard monthly payments over the course of the loan.
If you take out a $17,000 loan at 10% interest for 5 years, your *actual* cost would be around $21,000 if you paid the set amount every month for the 60 months.
Using totally generic numbers (because I'm too lazy to actually do the math
), if you were save up that money over the course of the year and pay it off in 12 months, your *actual* cost might only be $19,000.How many investments will get you $2000 on a $17,000 in 12 months time GUARANTEED?
This is with a 10% interest rate. Double those savings for Vallhalla.
Your probably right vi_. Unless he got in the giggilo buisness, then he might make that 2000 difference up.
Some of those interest rates are unbelievable! I guess 7.39% for 60 months isn't so bad...just signed the papers today on a new truck.
okay, everone here keeps thinking my rate is 19%.. hell I wish it was that. Truthfully, my interest rate is 22.5%. :Q so now you see why I'm trying to find out the best way to pay this off because I'm getting ass-raped on the interest. I call the 800 # and the payoff amount is almost exactly what I originally financed, after having made 6 payments already...
so.. if I send in this months payment as $1000, and specify on the check "for principle", they will put the extra to the principle? I just know that if I call them, they're going to tell me not to do that or say I can't do that, even if I really can, just so they can make more money off me.
Truthfully, my interest rate is 22.5%. :Q so now you see why I'm trying to find out the best way to pay this off because I'm getting ass-raped on the interest. I call the 800 # and the payoff amount is almost exactly what I originally financed, after having made 6 payments already...so.. if I send in this months payment as $1000, and specify on the check "for principle", they will put the extra to the principle? I just know that if I call them, they're going to tell me not to do that or say I can't do that, even if I really can, just so they can make more money off me.
so.. if I send in this months payment as $1000, and specify on the check "for principle", they will put the extra to the principle? I just know that if I call them, they're going to tell me not to do that or say I can't do that, even if I really can, just so they can make more money off me.
Or they going to pretend not to see the "for principle only" and put only $300 on your principle and rest on your interest believe me I have seen them do it...
Or they going to pretend not to see the "for principle only" and put only $300 on your principle and rest on your interest
believe me I have seen them do it...
Motorheader
Diamond Member
- Sep 3, 2000
- 3,682
- 0
- 0
Man, what a pain.
Definitely specify where you want the money to go. Definitely pay the extra towards the money you borrowed, not the interest.
I took out a 10K loan and paid it off in less than 30 days. They got confused (the lender) and didn't know what to do - they tried to charge me a "fee" for closing out the loan, even though I had paid the origination fee and paid it off within the month - they in essence owed me money back because it was a simple interest loan that was paid off before it had a chance to get any interest. Life smiles on you sometimes.
Definitely specify where you want the money to go. Definitely pay the extra towards the money you borrowed, not the interest.
I took out a 10K loan and paid it off in less than 30 days.
They got confused (the lender) and didn't know what to do - they tried to charge me a "fee" for closing out the loan, even though I had paid the origination fee and paid it off within the month - they in essence owed me money back because it was a simple interest loan that was paid off before it had a chance to get any interest. Life smiles on you sometimes.
RossMAN
Grand Nagus
- Feb 24, 2000
- 79,079
- 455
- 136
Sorry I only have time to read the first post and didn't read any others. I work in banking and used to work in consumer lending (including auto loans) for 3 years.
There is a 99% chance that your loan is a simple installment loan which accrues interest every single day, if it's a "rule of 78's loan" then it gets messy and more complicated. So we'll go with the assumption that you have a regular simple interest installment loan.
Here is a great auto loan calculator complete with graph but I don't know how much your original financed amount was or what your current balance is.
What I need to know is, what is the best way of doing this?
So would be best thing to do be to instead of paying $320 for this months payment, to write a check for $1000 instead, and just include this months coupon?
Yes this is the best option.
Write one check every month for at least $320 per month, no less. Anything you pay OVER the $320 will automatically first satisfy any outstanding interest charges ... remember that interest only accumulates every day and NOT ahead of time. So if your 36 month term loan is paidoff in 12 months then you ONLY paid 12 months of interest and NOT 36 months of interest. So every month send in a check for at least $320 with only one payment coupon. When the bank receives your check and applies your payment they don't care what payment it's for you could mail in an August 2002 payment and they could care less. All they care about is your loan number and the amount you paid, that's it. You're doing the smart thing in paying off your loan early by making monthly payments of around $1,000.00 If you know your current principal balance I can probably find a loan calculator which would tell you how much you SAVED which is even more incentive to make large payments. Also don't limit yourself to just paying once a month, if next week you have an extra $500 then mail that in. Also by paying yourself ahead you are satisfying the next months payment so let's say you get injured and can't make a payment for 2 months? No problem because your bank is expecting a $320 payment and when you mail in $1,000 that will make your current payment plus two future months.
Let's say you finance $15,000 and call for your payoff balance after 2 weeks. Your payoff balance would be a total of your principal balance, accrued interest (for 14 days), any outstanding late charges, annual fee, etc.
Sorry for rambling off, I hope this makes sense?
Call your bank Thursday and ask them "What is my per diem"? That's how much interest they are charging you per day. When you realize that it's like $3-$10 per day you'll realize that $10 of interest per day times 30 days = $300 of ONLY interest per month.
If you have any other questions please don't hesitate to ask.
There is a 99% chance that your loan is a simple installment loan which accrues interest every single day, if it's a "rule of 78's loan" then it gets messy and more complicated. So we'll go with the assumption that you have a regular simple interest installment loan.
Here is a great auto loan calculator complete with graph but I don't know how much your original financed amount was or what your current balance is.
What I need to know is, what is the best way of doing this?
So would be best thing to do be to instead of paying $320 for this months payment, to write a check for $1000 instead, and just include this months coupon?
Yes this is the best option.
Write one check every month for at least $320 per month, no less. Anything you pay OVER the $320 will automatically first satisfy any outstanding interest charges ... remember that interest only accumulates every day and NOT ahead of time. So if your 36 month term loan is paidoff in 12 months then you ONLY paid 12 months of interest and NOT 36 months of interest. So every month send in a check for at least $320 with only one payment coupon. When the bank receives your check and applies your payment they don't care what payment it's for you could mail in an August 2002 payment and they could care less. All they care about is your loan number and the amount you paid, that's it. You're doing the smart thing in paying off your loan early by making monthly payments of around $1,000.00 If you know your current principal balance I can probably find a loan calculator which would tell you how much you SAVED which is even more incentive to make large payments. Also don't limit yourself to just paying once a month, if next week you have an extra $500 then mail that in. Also by paying yourself ahead you are satisfying the next months payment so let's say you get injured and can't make a payment for 2 months? No problem because your bank is expecting a $320 payment and when you mail in $1,000 that will make your current payment plus two future months.
Let's say you finance $15,000 and call for your payoff balance after 2 weeks. Your payoff balance would be a total of your principal balance, accrued interest (for 14 days), any outstanding late charges, annual fee, etc.
Sorry for rambling off, I hope this makes sense?
Call your bank Thursday and ask them "What is my per diem"? That's how much interest they are charging you per day. When you realize that it's like $3-$10 per day you'll realize that $10 of interest per day times 30 days = $300 of ONLY interest per month.
If you have any other questions please don't hesitate to ask.
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