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- Can I only pay my principle on my car note and not...

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Carl, you are wrong my friend. I make principal payments all the time on my auto loan. You are required to make your monthly payment but once that is paid I make additional payments on principle balance only. My loan is a typical auto loan nothing special or fancy.

Chris

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Most lenders allow you to make additional payments. If you owe 300.00 per month pay as much more as you can afford. The extra amount will be applied towards the principle and not the interest. Lets Say if your payment is due the 28th if each month. If you can change the time of month you make your Payment then you will have more going towards your principle. Your payment is duethe 28th make you payment day on the 18th then you just saved the interest for that 10 days that you paid early. Your interest is calculated per each day. The early you pay the less interest you pay.

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Carl is correct, if your car payment is 300.00 halfway through your term and you have 150.00 of that payment going towards principal and 150.00 going to interest. You can not satisfy a monthly payment by paying only principal (150.00). You have to satisfy the monthly payment of 300.00 and anything OVER can be applied directly to principal even if it’s only 1.00. If you pay 400.00 monthly, 300 will satisfy interest and principal, that extra 100 usually goes in a “billing bucket” going to the next monthly payment unless you ask for them to apply it to principal. Some banks will apply to the princ automatically, depends on the bank.

I work for a very large bank (top 10) in the US. Started in collections, worked autos specifically in repo, and now I’m elsewhere with 10 years expierence in the industry.

I work for a very large bank (top 10) in the US. Started in collections, worked autos specifically in repo, and now I’m elsewhere with 10 years expierence in the industry.

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Thank you for this. Very helpful!

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When making payments to the principal by paying more on each payment You MUST specify that you want the extra money to go the principal or they will add it to whatever they want. Like interest or late payment fees. Always specify!!!

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Carl! THANK YOU. That is very useful I really appreciate it thanks.

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your note agreement would tell you. Should not normally be a penalty for paying extra each month. this only makes sense though if you dont carry a balance on higher interest rate credit cards. payoff the cards 1st.

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Mortgage and auto loans are different. The formula in the spreadsheet will not work for auto loans. Here is why:

mortgage payments are different from car loan payments. A good way to think about mortgages is that one 30-year mortgage doesn’t have a single loan, but rather individual loans with terms of 360 months, then one for 359 months, then one for 358 months and so on, all strung together.

Each month sees a payment calculated with a smaller loan balance over the new shorter term, and while the total of the payment remains the same, the amount of interest you pay in a given month decreases while the amount of principal a person pays increases. If you prepay mortgage, you save money on paying interest.

Car loans can either be: simple interest add-on (or pre calculated) loans or simple interest amortizing loans. Simple interest add-on loans are written as a single loan. All of the interest that will be due is calculated up front, added to the total of the loan as a finance charge, then that sum is divided over the number of months in the term to arrive at monthly payment.

Each payment consists of exactly the same amount of principal and interest. Prepayment won’t save money because all calculated interest has to be paid. Simple interest amortizing loans are the most common type of auto financing available. They work like a mortgage, with a declining loan balance and declining term producing a constant monthly payment with changing compositions of principal and interest. Prepaying such a loan can save you some money.

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Stop borrowing money. If you just think about it you are giving away your money. Save up and buy a car.

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This thread is pretty helpful, however, what I have gathered somewhat confuses me in regards to my auto loan payments.

For a 5 figure loan, my minimum payment began at $350/mo for a 3.3% rate starting November of 2017. I have steadily paid $550 each month since I started and my minimum payment has been $0 for a while. Obviously I still have a balance and my payment has not changed, but that doesn't necessarily mean my $550 is 100% principal right? How is the principal/interest payment calculated then? Am I only paying interest at that point and a really good chunk of my payment is principal now? I guess I just really don't understand how my lender changed my min. payment from $350 to $0.