Question about car loan

[Minnie824]

I have a question on car loans. For a 60 month loan with set monthly payments, if you put an extra couple thousand dollars towards the principal, does the monthly payment change, or would you have to refinance for that? If you put extra down and dont refinance, would you just end your payments early then? Thanks!

 

[peg2001]

In general, your car payments would remain the same but more of the payment would be going principal and less towards interest since the balance would be lower. Thus, your payments would end sooner.

Peggy

 

[battricia]

But be aware of doing this because many car loans have penalties for paying off loans before they are over. (ie if you owe 20,000 over 60 months, and you pay it off in 58 months you will be charged) And sometimes it's a large amount of money. Just check with the company you're getting your loan from.


tricia.

 

[Mishetta]

I think your payments would end sooner.

My DH pays extra $$ each month on our car note. Not much, just maybe $20 or so a month more. Suddenly we noticed that our monthly payment reduced!! He still pays the "old" amount & then some. Hopefully our note will be paid off much sooner too. Our loan does not impose a penalty for early pay off.

Why don't you just call your loan company & ask them?

 

[floridafam]

We just purchased a new vehicle.

We put nothing down. I asked about putting $2,000 down and our payments would only have gone down about $20 per $1,000 we put down.

 

[DD2Disney]

I worked at a bank (loan dept.) before becoming a sahm. A car loan is a different kind of loan than others. If you pay extra it just goes off the next months bill. UNLESS you specifically ask that it come off principal. so if you send in an extra $100 your next months payment would be $100 less.

 

[mudnuri]

Actually MOST loans work this way...we pay extra every month on PRINCIPAL of all of our loans, and we specifically spell this out. When DH's truck had a loan, GMAC would pull out the payment, and then I would send in a seperate check with payment for principal, this was noted on the memo of the check.

Same thing with mortgage, on the mortgage bill, each month it asks basically where to put the extra money.

John Deere credit is the same way- our tractor bill is the same as mortgage, on the ticket you specify where it goes.

If you do not specify, the money will go to the next due payment, where in fact, your not saving ANY money on interest...

Brandy

FYI I would NEVER sign for a loan that would not let me pay it off early without penalty..NO WAY! What happens if you come into some money and want to pay down debt....

 

[DocRafiki]

It looks like you'll have to ask the specifics on your loan, seeing the variety of answers here.

I got a car loan today and asked exactly your question. My answer was that the payments will stay the same, the payments will end earlier, and the loan will be recalculated so I will pay less interest each month beginning with the month that I make the extra payment.

My student loans work differently from that. They will apply it to the next bill (so I might have $0 balance the next month) unless I write "apply excess to principal" on the back of the check. If I do that, my future payments decrease little by little, and I save on interest.