If you have a mortgage or car payment, you can make an extra payment a year and you can pay it off much much sooner? I was told this today and not sure of it. I was told if you have a 5 year car loan you can pay it off in 3 years if you make an extra payment a year.
2007-11-14 10:11:09 · 3 answers · asked by Big D 3 in Business & Finance ➔ Credit
You are partially right. You can reduce the amount of time it takes to pay back a loan by making extra payments. The more extra payments(especially in the beginning) the more payments it will knock off at the end of the loan.
However, just using some basic logic, it would be impossible to pay off a 5 year car loan in 3 years by making 3 extra payments(1 extra payment a year). At most you would reduce it by 4-5 months, not 2 years.
2007-11-14 10:46:16 · answer #1 · answered by OC1999 7 · 0⤊ 0⤋
#1. You must continue the regular payments
#2. Yes, if you make 2 payments a month you will get to the point where you are paying off more principle than interest and can pay off the loan faster.
#3 Many loans also allow you, without penalty, to make lump some payments. This too will help you to start paying off principle instead of mostly interest. Again, this will allow you to pay off the loan sooner!
!!!!!! Go for it! Being debt free is great!
2007-11-14 10:20:39 · answer #2 · answered by westville sal 6 · 0⤊ 0⤋
You will pay it off somewhat sooner, but usually not as much sooner as stated in the question.
2007-11-14 10:27:12 · answer #3 · answered by StephenWeinstein 7 · 0⤊ 0⤋