terse

question...


so i get paid every two weeks, but my billing date for my car is on the 17th...

and as of right now....I've paid about 6 payments ahead..so i can afford to be late...a month and not worry..but anyways...my question is...

I get paid on the 10th of this month and also on the 24th of this month...and my bill is 498 and some change and I was wondering if it's going to hurt me if I pay 250 when I get my first paychek and 250 on the 24th when I get my next paycheck......

I forget how many days of grace period I get....but I'd rather do it this way so that I have more money in my pocket b/t paychecks...

thanks

MR1

Suggest you delete this post and contact Honda financial tomorrow. They will give you facts not opinions. My $.02

jafo

This is simple. You are allowed a one time change to the due date on your loan. You can move it as much as 15 days after. Since you get paid on the 10th and 24th, just change your date to the 28th. Definitely not a good idea to try and make two payments a month.

donahuej

Calling the finance company is good advice. This is how I have been paying all my bills for the last four years. The two things you have to do: 1) Get ahead in you payments - 1 to 1/2 to be safe as the 26 pay periods a year don't always match the short months like February. 2) Let the institution know you want the "extra" payments to go to the principal of the loan.

You will find you are paying one extra payment to the principal each year. The best news is your personal budget is always the same.

Good luck.

roadman

Honda Finance treats pre-payments as additional principal payments.

Making 2 payments this month STILL means you owe a payment next month

Splitting your monthly payments into 2 payments will save you a bit of interest, Honda calculates a straight interest due based on daily balance. The sooner the payment gets to them the lower your calculated balance will be.

Call them to get the exact details before you do anything

Brewmaster

What you need is already in this thread:
1) Doesn't matter how much you pay in advance you still need to make a payment every month
2) A late payment is always a bad idea (even if you've already paid some for that month) you will show as going late if total minimum payment is not paid by the due date
3) Call Honda Finance and ask for your payment due date to be changed

Good Luck!

rbf351

no actually he doesnt have to pay every month if he is ahead by 6 payments. currently i am 1 1/2 years ahead in payments and even though i pay every month, they send me a statement every month saying i owe $0.00. if you miss a month no big deal since it's already paid. basically i can sit and wait 1 1/2 years to make my next payment and not have a single late charge or problem since they already have their money for that time period

rbf351

here is a screenshot of my account which shows my next bill due on 3/3/05 is $0.00

terse

called them...changed my date to the 28th..and she said I didn't have to pay for 6 months since I was ahead....and she said it's okay if I pay half and half...and it might even be better...cause interests accrues daily...

KJSmitty

I would have never thought you could skip a payment, even if you are "ahead". In 26+ years of borrowing I have never had that option. One way or another the financial institution wanted/expected a payment each month.
Paying extra on your principle is always a good plan if you can. Take a house mortgage for example. Making one extra mortgage payment per year, going to your principle, will typically cut a 30 year mortgage to 17-18 years.

Either way, interest sucks....

P47ch

You have a valid point, but you've slightly exaggerated the impact of that one extra payment per year. You'll be cutting more like five years off the life of the loan rather than 12 or 13 years. Of course, it all depends on the size of the loan and the interest rate. The higher the interest rate, the more impact that extra payment makes. At 17% you'd be in the ballpark you mentioned.

KJSmitty

You are definitely correct P47ch,
My "statements" are based off of my folks old mortgage from the early 80's. They accomplished the mortgage in 17+ years. As you mentioned, like with my current mortgage at 4.75%, the result of that extra payment each year is less dramatic ,but very beneficial non-the-less.

jafo

Glad you took my advice on the 28th. Interesting that you can go without paying if you're "paid up".

AnitNO1iLLeR

question:

i owe about 19k on this car because my dam APR is 4.99%

if i pay the car off b4 my 5 year plan is up will i save $$? let say i pay the whole thing off in 2 years, will i save $$$??

thanks

jafo

Yes. Use any of the millions of auto loan amortization calculators on the web to see how accelerated payments will shorten the loan and save you some cash.

Click here for one I found searching quickly...

KJSmitty

Sure!
Using simple math for an example, say you borrowed $20,000 for your TL over 5 years. If you look at your loan paperwork it will state: amount borrowed-$20,000, amount/cost of loan over 5 years $24,000. Thus the cost of borrowing $20K for 5 years is $4000 (interest cost). Now, if you pay the loan off immediately you would save nearly $4000. If you wait until say the 4th year you would only save about $500. Bottom line, the sooner the better in regards to saving on interest.
If you can't pay it off all at once, send extra to your "principle" as often as possible. This will decrease the amount borrowed "now", thus decrease the amount of interest compounded over the life of the loan (which will be shorter given your extra payments).

(Go easy on me P47ch, no calculator or amortization involved here.... )

Shibby

same here, i am about 6 payments ahead also and get bills for $0.00 but i still pay the regular monthly payment

terse

i see amortization at work, but I don't know what it means...can you explain...including maybe balloon payments or something if you can, thanks?

AnitNO1iLLeR

cool, not sure how to use those things but thanks





thanks for the input!!

i actually havnt paid any payemtns yet cuz i bought the Acura Extended Care plan, which i think i might get rid of, its like $2200 i think

but i remember when i went to pay for the car the manager told me if i get the extended care plan (up to 7 years) my APR would be 4.99 BUT! if i didnt get the care plan it would be 6.99!!!!

i picked the care plan cuz if i didnt i would have to take the extra 2% and the care plan actaully cost me a little of $850, so at the time it looked like a win win option with the plan, but now i think i should cancel it and pay the car off in under a year


what do you guys think on this, sorry if I am not clear enough on my problem

jafo

You were robbed and the person you dealt with is a charlatan. Amazing that an extended warranty would have anything to do with the interest rate. Crazy! Any time they tell you to buy more to get a better rate, walk away. They're not honest.

Anyway, go to your dealer and cancel the warranty. You paid the retail price. You can negotiate that down to substantially less at a more reputable dealership. Now that the rate is locked in at 4.99, screw them by cancelling it! Go purchase it somewhere else when you have the spare cash (you won't be able to finance it).

Yoda117

Actually a lot of places do that...

for me it brought the rate down to the mid 3s... which was worth it. But I paid less than 1K for the warranty with lojack and the wheel/ding/winshield coverage. For me, it was worth it...

Then again I am driving Honda nuts by paying 1 - 1.5K per month so far, muahahaha!!!

I'll have this thing paid off by summertime

AnitNO1iLLeR

do i have to go back to the same dealer to cancel it?

can i do it over the phone?? or go to another dealer closer to home

jafo

You must return to the dealer. You have to sign paperwork. It cannot be done over the phone.

jafo

You paid under $1000 for an extended warranty and Lojack? Lojack costs $695 for the basic service. You're telling me you got an extended warranty AND ding protection for under $300?

It's not possible for the dealer to charge less than $695... That's what you would pay if you called Lojack and did it yourself.

Unless they charge different rates in different states? I live in California... I called and asked and do not remember telling them what state I lived in...

AnitNO1iLLeR

who would i go to? the same guy that i talked to when i agree to the care??

jafo

You see the finance manager.

P47ch

Your numbers look about right to me (also without aid of calculator). The only thing I would add is that at 4.99%, you might be better off sticking the extra money into some kind of investment rather than paying the loan off early. 4.99% is pretty cheap money, even with the overall low interest rates today. Find a nice mutual fund with low minimums and put all those extra payments into the mutual fund. By the time the TL is paid off you could be well on your way toward paying cash for your next car. (Not at one extra payment a year, but at the rate some of the folks here have mentioned you could have a decent next egg after a couple years.)

KJSmitty

Are you messing with me....

OK..

Amortization in this case is a computation including interest "cost"/percentage, the loan amount/borrowed, and the length of the loan - to come up with a monthly payment. It's the way interest is computed for each payment. Out of say a $500 dollar first monthly payment, $120 of that is the "amortized" interest for that month. Each following payment will result in a "lesser amount" going to interest due to the fact that the amount borrowed (your principle/balance) is also decreasing monthly.
Balloon payments are often used to decrease the amount of a monthly payment. Using the previous $20K loan example - You agree to a $20K loan with a $5K balloon payment. Thus, your monthly payment would be based off of $15K lowering your monthly payment by say $100. Once all of your monthly payments are complete you have to pay the $5K "balloon" payment (all at once). The thing to remember, the cost of the loan/"interest" is computed considering the entire $20K, so you don't "save" any on the loan cost per say... Works if you want a smaller monthly payment now and know you will have cash on hand in the future when the loan matures etc..

Yoda117

Well, nature of retail is that they do charge different rates for different states.

Next... LoJack is really trying to push their product on the higher-end cars and more volume = lower cost.

I hate to break it to you, but the markup on those is HUGE!!! I think that I paid $300 for the LoJack, $700 for the warranty and they tossed in the ding protection since I was hesitating on whether to go the full route.

That, and I'm much bigger than the guy on the other side of the desk

terse

wow..do you guys have finance degrees or what?

JPTLS03

AHFC will move your payment date for you if you request it. Depending on your payment history of course. The layest they can move it is to the 28th of the month. just move it and then put half the money aside each paycheck

jafo

Amazing. I gave the exact same advice two days ago in this thread. Read before you post...

JPTLS03

That is amazing.Does that make you feel better? Thanks for the advice I really appreciate it.

jafo

No, it makes me feel like you don't bother reading what other people wrote before putting in your own two cents.

JPTLS03

Some people do not have the time to sit and read 30+ posts before trying to help someone. Get a life. Do not bother responding I am not going to feed you and your attempt to raise your post count any longer. I will be unsubscribing to this thread. My advice being the same as yours was not going to end the world or this site. Was there really a need for you to post a negitive response? You just could not wait to get the opportunity to use one of those smile face things huh??

Thank You, have a lovely day, John P