For example, my car payment is $307 a month for 5 years. If I paid more than $307 this month, will my payments be a little lower from then on?
2007-11-10 20:04:06 · 10 answers · asked by Hai 2 in Cars & Transportation ➔ Buying & Selling
You are paying interest on our first payments... Not much princpal.
The faster you can pay it off...the less free money you give hem.,
2007-11-10 20:24:07 · answer #1 · answered by riverrat15666 5 · 0⤊ 0⤋
Your loan contract is a fixed payment agreement. If you pay more than the minimum payment the term will be shortened but the monthly payment will stay the same. Those who are saying that your future payments will be lowered are simply wrong; they don't know what they're talking about.
A credit card has a variable payment based upon the amount of principal. Paying extra one month will potentially lower the payments due in future months.
A fixed payment note like a car loan or fixed-rate home mortgage has equal monthly payments that must be made every month. Paying extra on any payment will shorten the term of the loan and will save you money in the long run.
2007-11-11 03:20:18 · answer #2 · answered by Bostonian In MO 7 · 6⤊ 0⤋
Yes they will pay less for hte car because, anything over the payment gets applied to Principle and then the next month's interest payment is based on a lower principle amount so, even paying 25 a month more can really pay off. If they can pay another hundred a month then again, they will really save a bunch. Keep in mind that interest is accrued daily so, if they make two payments a month then the overage won't all go to principle so, to get the biggest bang for the buck they need to make the payment + extra in the same payment. Again, make sure there is no penalty for paying it off early.
2016-03-13 22:25:35 · answer #3 · answered by Anonymous · 0⤊ 0⤋
No, paying more will lower the next month payment but you are still paying interest on the money you are sending. You will do better by sending the money in a separate check with "pay to principle only" on the bottom. This will pay your loan off early with less in interest.
If you are looking to lower your payments you should look into refinancing your car, "if" you're in need of a lower payment. The only way this is better is if you get a lower rate.
2007-11-11 03:14:29 · answer #4 · answered by Spiderman 2 · 0⤊ 1⤋
what will happen is that the amount you need to *pay* next month will be lower, and if you continue to pay more it will continue to get less.
However, the first time you only pay that lesser amount, your required payment will jump right back up to your original amount (or close to it, I'm not sure on the math here).
Paying more just means you pay it off sooner and pay less interest since you're paying more of your principal (the amount you were loaned) per payment.
2007-11-10 20:08:39 · answer #5 · answered by deorth2002 2 · 2⤊ 3⤋
no all it will do is allow you to pay off the car quicker.the more you pay over the minimum payment the quicker the car will be paid off. (be careful as sometimes it can incur a charge if it is payed off too quickly)
2007-11-10 20:19:27 · answer #6 · answered by Anonymous · 0⤊ 0⤋
No, but it will reduce the overall amount you'll pay for your car. The additional amount will go directly to paying the principal amount of the loan, and if you pay it off sooner, you'll save money in interest.
2007-11-12 02:40:15 · answer #7 · answered by Anonymous · 1⤊ 0⤋
It depends on the conditions that were stated when you made the deal. However, I believe that if you do pay more this month, you're monthly payments would reduce depending on the amount increased.
2007-11-10 20:08:56 · answer #8 · answered by Ibarra 2 · 0⤊ 3⤋
YES IF YOU CONTINUE TO PAY MORE THAT THAN $307.00 A MONTH YOU MONTH PAYMENTS WILL REDUCE AND YOU WILL SEE THIS ON YOUR MONTHLY STATEMENT.
2007-11-10 23:17:30 · answer #9 · answered by Anonymous · 0⤊ 2⤋
No, but you'll pay your car off sooner.
2007-11-10 20:06:29 · answer #10 · answered by Helen Scott 7 · 2⤊ 1⤋