i have a 66months term on my car loan, i plan on paying in the next 15 months. which is better
2007-04-29 09:17:35 · 6 answers · asked by biddy 1 in Business & Finance ➔ Personal Finance
You pay the principal down. This is my understanding of a car loan. You borrow x amount of money to buy a car or what ever. When you start paying the payments you pay the interest off every month, along with a small amount of the principal. The bank always gets there money first. The next payment is the same way. You pay all the interest accumulated that month and a little bit more of the principal. As you pay the principal down the amount of interest you pay each month goes down.
To see a brake down of the amount of interest vs principal you pay each month to the end of the loan go to backrate web site. This web site has good calculators and will be helpful for all types of loans
2007-04-29 10:51:56 · answer #1 · answered by T-Bone 2 · 0⤊ 0⤋
1
2016-09-26 11:57:28 · answer #2 · answered by ? 3 · 0⤊ 0⤋
I'm confused, in general from the answers many others have given.
From my understanding, most car loans will charge compound interest. That being said, you get charged the same amount of interest on the principal as well as any outstanding interest.
However, if you are considering paying in advance, I would agree with the other answers that you should instruct the company to deduct the amount you paid from the principal, and not leave it there to offset any future interest as it may generate.
2007-04-29 10:02:33 · answer #3 · answered by mraudit 2 · 0⤊ 0⤋
Pay down the principal. Don't simply make DOUBLE payments. Be sure to state to the loan company that the extra money goes towards principal. Also, be aware that some loans don't allow this, so check the fine print.
2007-04-29 09:22:09 · answer #4 · answered by jdkilp 7 · 1⤊ 0⤋
lower the principal
2007-04-29 09:23:03 · answer #5 · answered by endgame1915 3 · 0⤊ 0⤋
PRINCIPLE
2007-04-29 09:26:54 · answer #6 · answered by vswho 3 · 0⤊ 0⤋