Car Loan Question: Paying off loan early by paying payment first day it's due NOT on due date (less interest)?

I think it's an installment loan, not a simple interest loan, and the interest is prefigured based on x rate on y months of z payments

1

It works like this...Your first payment you paid on the 25th and only had 10 days of interest. Those days between Nov 25th and December 16th are not interest free. You will pay 21 days worth of interest between those days if you make another payment on Dec 16th. Then if you make another payment on Jan 15th, thats another 30 days of interest. Interest accumulates every single day and that interest it says you paid was just interest that accumulated between your last payment. Whatever interest has accumulated is what gets paid first, the the rest goes to principal. If only 10 days worth of interest accumulated then of course the rest would go to principal. If you want to knock yoru loan off early, pay more than the minimum.

Are you trying to save money or pay off your loan early? If you want to save money, you can make a note on your check to pay "principal only" When you do that you are paying down your principal of your loan which will make your interest payments less. The interest is based on a percentage of the principal amount. Making your payments early is not really helping you that much if you are still paying the set payment amount. That will only get your loan paid off earlier, not save you any more money.

I recently took out an auto loan also, and I did notice by paying really early (like the very first day right after the statement cycle), the monthly payment do go toward the principles more than the interests. But if you are paying more than the monthly required amount, you want to talk to the credit union how to pay toward principles ONLY. Because I done that with my car payment, and it ended gone toward my interest toward the next payment due. They call that Advanced payment....which you really want toward PRINCIPLES ONLY. My auto loan company only accept CHECKS on principle only payments, not online or any other menthod, and I need to write down "principles only" with loan number on the check. So talk to your credit union about that...

Your son needs to read the contract he signed. Most likely he agreed to make 6 years worth of interest payments or there was a penalty for paying the loan off early.

If you have pay on demand loan without any early payment fee, then go for it. Believe most installment loans don't have compounded daily interests charges, but they come out with new stuff everyday. The key is does it have early payment fee and is what you discuss considered early payment. Very vaguely remember news story on how you have to make one more payment after agreed number is paid, so lots of luck if that's what your talking about. it wasn't Libs let few banks control most lending.

The fastest way to knock out the debt is to sell the car. Then buy a good used car with cash. When you get tired of that car, save up some more money and buy a better one. You can't get ahead financially if you are paying interest on a car that is losing value every day that you drive it. You are only making the banks richer!

Why don't you check all this information out with the bank that you took the loan on?? That would be the best!!! They would know.

Wow, thanks! Just what I was looking for. I tried looking for the answer on the internet but I couldn't find them.