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Paying off car faster than normal monthly rates
Posted on 3/15/15 at 8:03 pm
Posted on 3/15/15 at 8:03 pm
Long story short...I pay $375 on my car for 36 months. My rate is 3.41%. However, I made a $1,500 extra payment last week on the capital. Will this automatically adjust my $375 monthly rate or will that stay the same? How do payments on capital affect this?
4
Posted on 3/15/15 at 8:14 pm to rpg37
The payment will stay the same. You will just be done faster And thus pay less total interest.
I would have kept that 1,500 but that's me. The savings over the life of that loan will be peanuts
I would have kept that 1,500 but that's me. The savings over the life of that loan will be peanuts
Posted on 3/15/15 at 8:42 pm to rpg37
You knocked off 4 months and saved about $150 in interest payments.
You can go to bankrate.com and scroll down to the calculators and go to auto loan calculators (obviously) and input your loan terms.
It also lets you apply extra payments to see how it will effect the length and interest payments on the loan.
You can go to bankrate.com and scroll down to the calculators and go to auto loan calculators (obviously) and input your loan terms.
It also lets you apply extra payments to see how it will effect the length and interest payments on the loan.
This post was edited on 3/15/15 at 8:49 pm
Posted on 3/15/15 at 9:04 pm to rpg37
Not many places to park money to get a guaranteed 3.4% return these days.
Posted on 3/16/15 at 6:44 am to rpg37
A 3.4% guaranteed rate for a relatively short-term note is pretty good these days, provided you have the cash on hand this isn't a bad idea although you aren't saving that much.
The fact that the car is a rapidly depreciating asset matters b/c it is security for the loan. If you total your car tomorrow the full balance of the loan becomes due immediately and the insured value of the car won't be enough to cover it. That said, if you just squirrel the money away instead then it probably won't matter much either way.
Bottom line is that provided you don't need the cash for something later this isn't a bad idea although it probably isn't a major financial decision either.
The fact that the car is a rapidly depreciating asset matters b/c it is security for the loan. If you total your car tomorrow the full balance of the loan becomes due immediately and the insured value of the car won't be enough to cover it. That said, if you just squirrel the money away instead then it probably won't matter much either way.
Bottom line is that provided you don't need the cash for something later this isn't a bad idea although it probably isn't a major financial decision either.
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