Can I only pay my principle on my car note and not be penalized?

Forum|Forum|7 years ago
October 5, 2018
25 replies
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I pay a little over $300 a month and in 10 months I've only contributed $500 towards the loan amount...>:-[

Car Loans

Carl11_2

Employee

You'll have to talk with the lender about that, as it depends on the terms of your loan. I seriously doubt however, the lender will do that. But if your payments are only $300 a month, if you pay more than that each month the additional amount will reduce the principle by that additional amount, resulting in less of each payment going towards the interest, more going towards the principle, and you'll pay off the loan that much faster and sooner.

bigben425

Employee

you want to make your normal payment each month on time then within that same payment period make a principal only payment of as much as you want that will reduce how much you pay in interest by a lot while lowering you principal amount.

HurricaneWray

Employee

In my personal experience, you are required to make the minimum monthly payment that contributes to the interest and principal balance. When making payments, there have been options to make additional payments towards the principal only. That will reduce your overall balance and reduce the overall interest you pay over time.

mntnheaven3

Yes even if you pay your reg monthly payment and an additional 100-150 dollars extra a month it will reduce your interest over the life of the loan and pay down the principle ... just make sure that you tell them to apply it to the principal!

308nw2ndst

Employee

Can i

Stevep0070

Employee

Short answer is no. Loans are amortized in a way that at the beginning of the loan you are paying mostly interest and at the end you are paying mostly principle. That is why you haven’t paid much down on the principle. Say your loan is a 6 year loan. At 3 years in, half of you payment will go to principle and the other half toward interest. The first year years more interest than principle and the second 3 years more principle than interest. Think of the letter X on a graph where the top left line is interest and the bottom left line is principle.

Carl11_2

Employee

I had a 30 year mortgage on one of my rental properties that I purchased in 2002. By adding $100 a month to each payment I paid off this property in less than 15 years. Now there is a formula one can use in an Excel spreadsheet that allows you to "plug in" values such as payment period, amount, interest rate and loan term. It will show you how long it will take to pay off a mortgage by changing the monthly payment (or whatever the payment period is, if not monthly.)

Now on the attached Excel spreadsheet I've set it up for monthly payments using the same formula that banks use to figure interest rate based on your outstanding balance each month.. In the first line of figure (line 3 on the attached) you can change the figures in columns A, B and C of row 3 with whatever your loan amount is, the monthly payment, and the Interest rate. You can change your monthly payment to see what difference it will make on your time to pay off the loan. The items you can change are in bold print. The sheet is password protected so that you can only change the variables and not accidentally mess up the formula. But if you want to play with it, I've set the password on this uploaded copy to "password" (without the quotation marks) so you can unprotect it if desired.

mkyiela

Employee

Carl, can you please email me the link? [email address removed]

Irvincabrera182

I need to buy one car

CAK

Employee

You have to pay the minimum amount of your car loan so they get their interest that month but you can pay extra on the principal in most cases. What I did was say you are paying 300 a month and your statement indicates that 200 is interest and 100 is principal, I'd designate that another 50 or 100 was for principal. If they give you payment books, I'd take out my monthly payment and then write myself a note on the last payment that I put that amount on the last payment. If I gave an extra 100 and the principal was 100 at that time, I'd just fold over the last payment as that is in essence what I did. I hope that makes sense

Farrock02

Employee

That sounds like you have a very high interest rate. The best thing you can do is pay more every month. Anything above your required payment will go towards your principal. You should also look into refinancing for a lower rate

Credit1

Employee

You can pay as much as you want towards the principal if you car payment is 400 you can pay as much as you want after that and it will.go towards the principal

waymaker3

Employee

Unfortunately, no you can not. The most common way to lower your loan balance faster is to pay your regularly scheduled payment

( principle & interest ) PLUS an additional amount on the principle, if you're financially able to do so. Also, shop around for an auto loan which includes a lower interest rate (APR). And remember to never miss a scheduled payment. If it looks like you're going to miss a scheduled payment, call your lender to discuss any options they may offer. Best Regards, me.

lkjulian1958

Employee

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.