Let's say I have a 60 month car loan and I pay 170 a month. If for the first couple months, I pay a thousand dollars towards my loan, will my monthly minmum decrease for the rest of the life of the loan or will my loan period simply become shorter while my monthly minimum stays the same?
2007-02-09 05:48:00 · 7 answers · asked by LG 1 in Cars & Transportation ➔ Buying & Selling
just your term lenght will decrease
2007-02-09 05:53:47 · answer #1 · answered by Robert P 6 · 0⤊ 0⤋
i have done this before. If you have a $300 car payment and send $400 the next months due-amount will come in for $200.00.
If you send $200 the following month, that will cancel-out whatever advantages you made with the first over payments and your required monthly will return to normal after that.
If you're going to give a large amount ( a couple of thousand ) that is called "Refinancing" the loan. Refinancing the loan will lower your car payments for the REMAINDER of the loan's life but you have to go to the bank and tell them that you wish to refinance it as opposed to just "mailing it in"
2007-02-09 15:01:27 · answer #2 · answered by rob1963man 5 · 0⤊ 0⤋
It depends on how it was set up when you got the loan. It could shorten the loan, or you might have the option to apply a certain amount towards future payments on the loan. Normally, it will just go towards the premium.
2007-02-09 13:57:47 · answer #3 · answered by voidtillnow 5 · 0⤊ 0⤋
Car loans are simple interest loans, anything you pay over your payment goes towards the principle. Your monthly payment won't go down but your payoff and term will go down, adding equity, or minimizing inequity in your vehicle. Its a good idea!
2007-02-09 14:23:28 · answer #4 · answered by brian m 1 · 0⤊ 0⤋
I'm not really sure, try calling your bank. But, I did want to let you know that if you are going to add extra to your payments, make a little note on your check or something that says the excess payment is to be put towards the principle. If not, you will just be paying interest rather than for your car.
2007-02-09 13:53:48 · answer #5 · answered by Summer 5 · 0⤊ 0⤋
anything you pay extra on your payment is supposed to go towards the principle,or the amount you borrowed so that it shortens the life of the loan. but you need to watch it close and make sure they are putting the money towards the principle and make sure that the amount of the loan is dropping.
2007-02-09 13:57:14 · answer #6 · answered by dynamite136 3 · 1⤊ 0⤋
i do believe that the length of your loan will decrease
2007-02-09 14:09:32 · answer #7 · answered by mj_jll 2 · 0⤊ 0⤋