I made a couple of extra payments to my car loan for say $800 and the split it and $100 was applied it says towards interest, payment, or fee and not my balance. Im not too familiar with the whole load process so I may sound really dumb but I'm going to ask anyway...What does that mean and is there just another bucket or something that that payment was saved towards?
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Favorite Answer
Any loans takes the interest payment off the top. Means 100 of that 800 went for interest and the 700 went toward principle That is good because the quicker you pay down principle the less interest charged each month.
Anonymous
it works like this...Your first fee you paid on the twenty 5th and in straight forward terms had 10 days of interest. those days between Nov twenty 5th and December sixteenth are actually not interest loose. you pays 21 days worth of interest between those days in case you're making yet another fee on Dec sixteenth. Then in case you're making yet another fee on Jan fifteenth, thats yet another 30 days of interest. interest accumulates daily and that interest it says you paid grew to become into merely interest that gathered between your final fee. regardless of interest has gathered is what gets paid first, the the rest is going to important. If in straight forward terms 10 days worth of interest gathered then of direction the rest could pass to important. in case you prefer to knock yoru very own loan off early, pay better than the minimum.
Tricia
i would recommend that the next time you make an additional payment in the same month that you mark it specifically PRINCIPAL ONLY. that way there is no error in knowing exactly where the funds are to go.