Paying off a vehicle early

[tiggerlover]

I have 11 more payments to make on my van and it will be paid in full. I would like to pay a bit extra each month and try to pay it off in 9 more payments instead of 11. Can I just send a little extra each month or do I have to make the designated payment? If I do pay it off two months early will I save any money in interest or finance charges?

 

[AirForceRocks]

You can call and ask what the payoff is - subtract that amount from the amount left for 11 monthly payments, and that will tell you what your interest savings will be. The way loan payments are set up, you will probably not save too much in interest.

If you do decide to increase your monthly payments, I would designate the additional amount as an additional principal payment, just to be sure.

 

[patsal]

Just send in any amot you'd like in addition to the payment. This will reduce your payments a bit. Unfortunately you pay more interest early in the loan than you do at the end so a little added to the first bunch of payments makes a biger impact on interest savings in the end. That being said, you can add to each of the payments to reduce the number of payments but your interest savings will be very minimal.

 

[Goofyposter]

Can I just send a little extra each month or do I have to make the designated payment?

Sure! I've never heard of one you can't!...you may need to call the company...but additional priniciple payments shouldn't be unheard of to them. I know with chrysler...there's a place on the payment stubb marked "misc."....I've used that before and it is properly credited against the priniciple balance.

If I do pay it off two months early will I save any money in interest or finance charges?

Possibly not as much as you'd like! ....you'd need to ask the company for a schedule of the loan payments broken down by principle & interest....the short answer is yes you would save some amount!

It's always best to get out of debt as quickly as possible!

 

[RitaZ.]

Call your lender to find out about sending extra money each month.

My car loan allows me to pay extra each month, I think most lenders allow you to do that. In my personal experience, you won't save much by paying your loan off two months early. You have already paid most of the interest on the loan, at this point the savings would not be significant. Even if the savings aren't substantial and you would have the satisfaction of paying off the loan earlier, then go ahead and do it.

 

[believe]

DH and I thought of doing this but we knew we weren't saving on the interest. Our interest for 3 yrs was only $600.00 total, so towards the end of 2 yrs we knew the money we would have given to pay of early would better serve us in another way and we would save much by paying off early. You may want to consider using any 'extra' money on other bills that may have higher interest rates.

 

[tiggerlover]

Thank you for your help. Even though there won't be much of a savings, I would like to get it paid off. The faster we pay it off the faster we can put that $333 into our "house down payment" fund. DH retires from the military in two years and we won't buy another car until we return to the US, so the more time I have to put into our down payment fund the happier I will be!

 

[believe]

I would still check to see if you are saving any interest. If not, but the extra money into the savings for your downpayment. You would still end up with the same amount in the savings by the end of those 2 months, plus gain interest on your money.