Question About Car Loans

[novon]

When you get a car loan, are you paying off all the interest first, and then the principle, or does the interest add on daily?

 

[Yossarian]

For mine each payment went to both interest and principle. Anything above the required monthly payment went to the principle. Interest is compounded monthly I believe.

 

[RossMAN]

Originally posted by: PipBoy
For mine each payment went to both interest and principle. Anything above the required monthly payment went to the principle. Interest is compounded monthly I believe.

Correct except for interest accrues daily. If you made a car payment today for $400 which satisfied your interest and the rest went to principal. If you were to call your bank 3 days later and ask how many days of interest has accrued? They would say 3 days.