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Question About Car Loans

N

novon

Diamond Member
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?
 
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.
 
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.
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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.
 
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