Any finance guys out there or anyone that understands financing and loans?

I took a 5 year loan on my CLS and figured I could pay it off in 2 years as long as I send in extra towards principle.

Okay, my situation is this...

I send in 1 check each month with extra money in it towards principle (which I write in the memo line). Each time I send it in, my next payment date gets pushed out to later. However, I still continue sending in my payment checks according to the original schedule. I have checked online and it looks like when they post the check receipt, they take interest based on the time when the previous check is received and when the current check is received.

Other option would be to send only the required payment and send a principle only payment to another address specified.

Are these two scenarios the same? I'd rather save a stamp and a check with the first option if it's the same. I have called their customer service and they don't know squat there. Some have told me not to send in 1 check but to send in principle only checks to the 2nd address. And some customer service people say it makes no difference. What do you all think?

 

I don't think there's a difference since they are going to charge you interest compounded daily based on the outstanding balance of tyhe loan (you may need to find out if they are charging you more interest in the first few years or if it's a straight interest loan)

Any excess money you send MUST go to principle, they just push due dates out to get you to take a break and incur the extra interest they're missin out on.

Ask them to send you a payment schedule for the balance of the loan, if there are any early payment penalties, and if you can refi for a shorter term (you should get a better rate for a shorter term!)

Hope this helps

 

I think 9mileskid is right - shouldn't be a difference. Also, there are lots of amortization calculators available on line (search google) that can spit out a payment schedule

 

I do the same thing, just keep doing what you do. Every month my payments get lower and lower, until you get below $0, and then they start saying, no payment required.

 

Here is what I would do. First, never, never deal with a rank and file person when it comes to money things that are complicated. Call your bank and ask to speak to someone higher up, such as a supervisor, dept. head, general manager in charge of the department. Do not, I repeat...do not leave this up to a customer service person or consider yourself fucked. It's the only way what you want to do will work...AND GET IT IN WRITING.

 

I'm not sure if this applies to car loans...

When I overpay my student loan bill I have to specifically write in the memo that the excess should be applied to principal. If I don't so this they just make it another interest payment.

Not sure if this applies and if it doesn't just ignore.

 

Your lender sucks. You have to call them before you send your payment and indicate that you want your pre-payment be applied towards principle without postponing or reducing your monthly payments. I doubt they will do this for you, but they could.

You should have financed your car with
www.peoplefirst.com
or www.eloan.com

You could get 4.5% interest rate(on new purchase) They apply pre-payments toward principle without reducing or postponing your payments ( and you dont even have to tell them that ).

Whats your interest rate right now? You could get 5.49% if you refinance your loan.



NEVER FINANCE CARS AT THE DEALER, they always give you bad interest rate UNLESS manufacture has a special low financing.....(0% or 0.9% and etc)