I want to pay off my auto loan?
Loki asked:
My auto loan has about 5k and change left. I had no credit, nor a co-signer, so I had to bite the bullet of a high interest rate. 14% to be exact. High, I know. However, I want to pay this off by September buy sending in $1000 every 2 weeks. This is possible, but I need to know how this interest is applied. I don’t want to send in 1k and have it all go to interest. I believe the interest was precalculated, so how would this work? Paying 1k until September will leave me with a few payments, but I at least wanna have 12 payments made before I pay it off. Going back to school, so I will need the extra $230 a month, which is what I pay monthly. Any help would be greatly appreciated. Thanks.
Juan
My auto loan has about 5k and change left. I had no credit, nor a co-signer, so I had to bite the bullet of a high interest rate. 14% to be exact. High, I know. However, I want to pay this off by September buy sending in $1000 every 2 weeks. This is possible, but I need to know how this interest is applied. I don’t want to send in 1k and have it all go to interest. I believe the interest was precalculated, so how would this work? Paying 1k until September will leave me with a few payments, but I at least wanna have 12 payments made before I pay it off. Going back to school, so I will need the extra $230 a month, which is what I pay monthly. Any help would be greatly appreciated. Thanks.
Juan
Stacy
that’s not usually how it works. if you pay 1k now, some part of that will cover the interest due on the current loan balance, the rest will be credited to principal.
interest pre-calcs and payoff schedules generated at the time of the loan are only approximations. paying early or extra will save you interest charges.
check your loan agreement for info about early or accelerated payoff.