Making early payments

[Calistob]

I currently have a car payment in which i pay more then i am required to everymonth. the finance guy said that would be ok, and that my extra money would be taken off from the principle. However my next payment isn't for a few months now. does this mean that the guy was lying to me, and all i'm doing is making my same payments early, and not saving from the interest? Thanks.

[Ronin]

The way I had to do it is write a check and send it to a totally different address for "Principle Only Payments." It's weird, but that's the only way Nissan does it. They charge $13 to pay by credit card online lol!

It's possible they applied the big payment towards your next payment since you didn't specify an amount to principle.

Most car loans are simple interest loans, so paying extra -- while good -- is not as beneficial as paying on a compound interest loans (like credit cards).

[DebbieL]

Interesting. Any loan I've ever had, extra payments automatically went straight to principal. I guess I'm dealing with a good bank! I just make the payments online and it comes off the principal. I've had a loan for a car, but never a car loan (if that makes sense). I don't do dealer financing. I just took a personal loan at a good interest rate and used it for a car.

[jodi]

I pay extra every month on DH's student loans. I was sending in a separate e-mail a note asking them to apply the excess towards principal instead of advancing the due date. They wrote back to tell me that even if the due date is advanced, the excess is still applied to the principal. However, I don't think all companies work like that. You best bet would be to call or write to them directly to find out how they apply the payment.

[mekish]

i think it depends on the agreement you signed, sometimes the interest is fixed and therefore you'd have to pay all of it regardless of how quick you pay back the loan. He's probably not lying but check your contract to be sure.