Car interest

[goofyernmost]

He was confused because, when the bill comes, is says $0 due, which made me think that they are not putting the extra payment toward the principal.

Ah, if there ever was a reason to pay attention in math or finance class in High School...this would be it. Look how easy it is for an honest, hard working soul to get caught up in a web of money grubbing (well, you fill in the rest).

 

[cglaura]

He was confused because, when the bill comes, is says $0 due, which made me think that they are not putting the extra payment toward the principal.

When I had a car loan years ago, you had to specify you wanted it to go towards extra principal. I paid online though, and they had fields for each. He might have to check on that.

 

[tink20]

Ok, he just called DD on his lunch break, and I talked to him. The loan is for 3 years and the interest rate is 24% (not much better) He is noting on the payment that the extra is for principal (there is not a specific spot for this on the bill) and said he called the finance office (the one he is with now) The balance is around 9,000 and he has only been paying since Jan, not Oct (my mistake) So I figured it up and it seems correct.

New question? If you have only been paying on a loan for 6 months, do you think we even have a chance of him being able to refi, or should he wait after a year ( I don't want to go and waste time and get his hopes up if they are going to say no) He said he ask his bank last week, and they said he would need a cosigner. So, how long does it take to establish credit?

 

[golfgal]

Ok, he just called DD on his lunch break, and I talked to him. The loan is for 3 years and the interest rate is 24% (not much better) He is noting on the payment that the extra is for principal (there is not a specific spot for this on the bill) and said he called the finance office (the one he is with now) The balance is around 9,000 and he has only been paying since Jan, not Oct (my mistake) So I figured it up and it seems correct.

New question? If you have only been paying on a loan for 6 months, do you think we even have a chance of him being able to refi, or should he wait after a year ( I don't want to go and waste time and get his hopes up if they are going to say no) He said he ask his bank last week, and they said he would need a cosigner. So, how long does it take to establish credit?

He should have been able to get a MUCH better rate at a bank or credit union to start so he should be able to refinance now, especially since he has paid down so much so quickly. Poor kid. At least this is a good learning experience for him.

 

[It'sWDW4me]

Ok, he just called DD on his lunch break, and I talked to him. The loan is for 3 years and the interest rate is 24% (not much better) He is noting on the payment that the extra is for principal (there is not a specific spot for this on the bill) and said he called the finance office (the one he is with now) The balance is around 9,000 and he has only been paying since Jan, not Oct (my mistake) So I figured it up and it seems correct.

New question? If you have only been paying on a loan for 6 months, do you think we even have a chance of him being able to refi, or should he wait after a year ( I don't want to go and waste time and get his hopes up if they are going to say no) He said he ask his bank last week, and they said he would need a cosigner. So, how long does it take to establish credit?

He's done an excellent job and should be proud of himself for paying so much off already. Unfortunately though, with only 6 months of a credit history that may not be long enough for him to refinance on his own. He may still need a co-signer. I think he should definitely talk to someone at the credit union. If they can't refi him on his own right now, they can at least give him a guesstimate at how much longer of a history he would need or what the max is that they can loan out to him and when that would be (like "we can refi you in about 6 months at a max of $5,000 provided you keep up the good payment history")

Best of luck to DD's BF!

 

[bumbershoot]

But last night he ask me, why his principal was not going down. I'm just trying to help him, maybe see if he has enough credit established to refinance.

He was confused because, when the bill comes, is says $0 due, which made me think that they are not putting the extra payment toward the principal.

Oh yes indeedy.


OK so we had a 20.25% interest rate on our car loan; borrowed 13,282.38. DH had "neutral" credit, and the dealership found Chase willing to lend it to us. It was an emergency situation, our sole car had just died, we had no real options.

It was supposed to be for 66 months, but the amount paid in principal was making me nearly throw up, compared to what was going to interest, so once I got my hands on the finances I started doing things to clean it up. First off, pay immediately. Turns out that "grace period" DH had been using was costing us a LOT in interest. Second off, make sure they know where you want your money to go!

With Chase, they made it complicated to pay towards principal. You either had to send in a check and mark the box, but we paid online. Which meant calling each month. What I finally realized I could do was make the payment, wait a few days, then schedule a transfer from our Chase account to the loan. But there was one way to do that where we were charged $10 each time...the other way had no charge but took longer.


We got the loan in 8/07. We finished it off in 7/09. The total in interest we paid was $5,231.82. Almost all of that was paid in the first year, while DH was still in charge. The second year we paid nearly nothing in interest, because I was so aggressive about paying it all down. And that's despite about 5 months of not doing the principal-pay "right".


BAsically he has the option of calling to see if the money they've put "ahead" for him can be moved to principal (Chase said they would do that for us, but the previous time they were supposed to do something complicated they messed up so I said no), or he can ONLY pay principal for as long as his account says he owes $0 that month. He can put that whole payment plus the extra towards principal by doing it that way.

Of course, run it through to see which is cheaper.

We chose to NOT refinance, because we worried that the "big interest during the early days of the loan" would just start over. So we just slogged through and finished it off.