Painfully stupid auto loan question

[Hedy]

Long story short: I bought and financed a car with Nissan financing two months ago (shockingly, they were willing to give me the best rate, the joys of being 23 ). Because of the circumstances surrounding my car purchase, I put less down (only 20% of the car's price) but planned to make large payments to principal the first couple of months. With my first normal payment, I also made a separate, larger payment to principal. As I should be getting my next bill in about a week, I just checked my account online. It said that my next payment is for $100 less than my payments are, and isn't due until March 2008.
Obviously, I'm not waiting 10 months to make my next payment, but is it normal that a payment to principal would make you not need to make a payment for 10 months, and to cut the payment so much? The payment to principal was about 20% of what I owed on the car, so it wasn't a small payment, but still.

[project15]

You need to specify that the extra payment goes towards principal, or else they will count it as monthly payments like it seems they did in this case. You should call them and see if it can be fixed. Otherwise, keep saving the monthly payments since you don't have to pay them and them do another lump sum toward PRINCIPAL next time.

[poundwise]

Precisely. By sending in the money, you have not shortened the term or reduced the principal because the lender has applied it as pre-payment of the monthly payments. You need, instead, to find out how you specifically send payments toward the principal balance. You will still make the regular monthly payment but will take chunks out of the balance/payoff this way.

As the previous poster suggested, I would call and the latest payment you sent applied properly, if you can. Simply put, you want to pay down principal, not pre-pay payments. That's what you'll need to address with the lender.

[Hedy]

You need to specify that the extra payment goes towards principal, or else they will count it as monthly payments like it seems they did in this case. You should call them and see if it can be fixed. Otherwise, keep saving the monthly payments since you don't have to pay them and them do another lump sum toward PRINCIPAL next time.

See, that's the part which confuses me. I sent it to the principal address, marked attention principal.
Looks like I'm calling Nissan tomorrow.

[Hedy]

Called Nissan first thing this am-payment did indeed go to principal, their billing automation is just wonky.
Thanks for your help!

[poundwise]

Glad to hear that it was applied correctly.

[cbmeeks]

Hey, while you are at it, send some to HSBC too...I need to get that van paid off.

LOL

Seriously, that is a good question because I plain on starting RAPID early payoff of two cars next month (after I finish with the IRS). I will make sure my extra money goes towards principal.