income tax and car note?

Question

i pay 344 a month for car note which i have to pay for 4 years to pay off my car. well i am about to get my income tax and will be have a little money to go towards my payment. well my dad told me to put some money towards the principle and pay up my car note about 4 months. Have any one done this as far as paying the principle of the car note and a couple of the car payment itself. tell me your experience. The idea is the take a shorter amount of time to pay off my car instead of 4 years

i know the quickest way to pay off my car is to pay a lump some and still continue to make the payment but what i need to know is it a way to pay just the interest only

Answer 1

Yes, it can shorten your payments significantly, depending on the amount that you pay towards the principle. Every payment you make gets split in two. Part goes towards your interest and part goes towards the principle. Every payment that you make that has more money than the monthly payment, the extra money goes towards the principle. You should always try to pay a little over the monthly payment even if it is just 5 dollars, because that means you are paying 5 dollars that does not have interest applied to it. Lets say that you double your monthly payment. It should take half the time to pay off the car right. Wrong, it would actually take less than half the time, since the period of the loan is including all the interest that you would pay if you ride out the loan. I hope that I have helped good luck.

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You do not want to pay the interest only. You only want to pay on the principle. If you pay more towards the principle, in the long run you will not have to waste more money on the interest. Interest is only good when it is paying you. EX. your bank account.

Answer 2

You can either prepay your next 4 payments (which you need to contact the lender and let them know what you're doing) or they will automatically apply the excess to principle and still continue to charge you the monthly payments. The quickest way to pay off the note is to pay the lump sum and continue to make monthly payments.