So little did I know...

[Doubeleive]

that if I make the payment on my Car loan as soon as it's posted that I will pay less interest than if I wait until a couple days before it's due. I was looking over my loan and payments (I make a double payment each month) my payment is $553 plus I put another $500 towards the principal, and I saw interest was different each month normally going down each month but a couple months were more than the previous month and it all added up to how soon I made the payment, it can make almost a $100 difference towards the principal (now I feel like a dumbass, lol) so I guess it can depend on your type of loan but now I know.....

 

[kbuskill]

that if I make the payment on my Car loan as soon as it's posted that I will pay less interest than if I wait until a couple days before it's due. I was looking over my loan and payments (I make a double payment each month) my payment is $553 plus I put another $500 towards the principal, and I saw interest was different each month normally going down each month but a couple months were more than the previous month and it all added up to how soon I made the payment, it can make almost a $100 difference towards the principal (now I feel like a dumbass, lol) so I guess it can depend on your type of loan but now I know.....

Don't feel bad... lots of people don't understand how interest accrues....

I used to pay all my stuff weekly for this very reason. Your interest accrues daily so by paying weekly the interest can only accrue so much.

Example... $800 a month payment = $200 a week and some months have 5 weeks so that equals 1 extra months payment every year without even noticing you did it.

 

[Doubeleive]

Don't feel bad... lots of people don't understand how interest accrues....

I used to pay all my stuff weekly for this very reason. Your interest accrues daily so by paying weekly the interest can only accrue so much.

Example... $800 a month payment = $200 a week and some months have 5 weeks so that equals 1 extra months payment every year without even noticing you did it.

yep, so now I'm going to be on it, lol, just shaking my head that it took me this long to figure that out at least I have knocked 2 years off the loan already, 10 months or less and I will be done.

 

[kbuskill]

yep, so now I'm going to be on it, lol, just shaking my head that it took me this long to figure that out at least I have knocked 2 years off the loan already, 10 months or less and I will be done.

The other thing about paying weekly is after a couple months you are actually paid up ahead by a month or two and that is kinda nice in case you ever had an emergency and needed some extra cash one month you could actually not pay it and still be paid up.

 

[nadthomas]

I think banks have figured out that people have figured out the twice a month/early payment thing saves interest. The banks make less money on your loan if you do that. I asked about this on all of my current loans and I was told the payment is not posted until the due date or something like that so interest is calculated the same. So, I think they have updated the loan language to maximize their profit on a loan. Or the person I talked to was an idiot and/or they lied to me, and I'm an idiot for believing them.

Although kbskill point about paying weekly is still valid, because you will eventual make enough extra payments to payoff a loan early, and that will save you money/interest.

 

[Doubeleive]

I think banks have figured out that people have figured out the twice a month/early payment thing saves interest. The banks make less money on your loan if you do that. I asked about this on all of my current loans and I was told the payment is not posted until the due date or something like that so interest is calculated the same. So, I think they have updated the loan language to maximize their profit on a loan. Or the person I talked to was an idiot and/or they lied to me, and I'm an idiot for believing them.

Although kbskill point about paying weekly is still valid, because you will eventual make enough extra payments to payoff a loan early, and that will save you money/interest.

I just made my payment the other day as soon as I could it took off $60 in interest which made it only $43, 2 months ago when I paid just before the due date it was $149

 

[nadthomas]

I just made my payment the other day as soon as I could it took off $60 in interest which made it only $43, 2 months ago when I paid just before the due date it was $149

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I'm not saying what you said for your bank/loan isn't true, but when I asked about this to my bank, I was told on my loans the way they post payments and calculate interest it wouldn't make a difference.

I should probably just try it, and see if it does indeed make a difference. It certainly wouldn't be the first time that I found people to be incompetent at their job.

 

[sarneson91]

I've followed basically the same timeline as kbuskill, however for me its twice a month on single monthly payments, being in the Navy, it's just more practical, but I do "full payment" amounts bimonthly. By the time I get back from this deployment the tahoe will be paid off at right at a year early.

 

[Doubeleive]

I'm not saying what you said for your bank/loan isn't true, but when I asked about this to my bank, I was told on my loans the way they post payments and calculate interest it wouldn't make a difference.

I should probably just try it, and see if it does indeed make a difference. It certainly wouldn't be the first time that I found people to be incompetent at their job.

I don't know but I just know that the "due" amount shown now will not increase and it appears that I am paying less interest if I pay as soon as it is processed monthly and more is applied towards the principal when I do it that way. I googled it and got the same answer, based on a loan that accrues interest "daily"

 

[ncpepperman]

I don't know but I just know that the "due" amount shown now will not increase and it appears that I am paying less interest if I pay as soon as it is processed monthly and more is applied towards the principal when I do it that way. I googled it and got the same answer, based on a loan that accrues interest "daily"

Your interest amount will go down each month as the principle decreases. Make sure they are not just applying a payment to both if you're making an extra. Always have them apply extra $ to the principle. Many a time they have used it for a "payment" and not principle .

A home equity loan used to be a good way to finance a vehicle as the interest was deductible.

Here's a good link that will show you the figures...............

https://www.amortization-calc.com/auto-car-loan-calculator/

 

[08HoeCD]

All simple interest loans work this way:

Simple interest is a quick and easy method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.

The one thing that may give you pause, however, is determining how much your money is worth in your checking account, or being applied to other expenditures, versus being handed over to your bank/creditor.

I've got a loan with only 2% APR, so I'd rather make regular payments at or just above the monthly minimum because the interest on the loan is minimal-----I'm paying pennies to enjoy the financing over time rather than throwing all my cash towards the payment to reduce the principal. It's 'cheap' money.

We all have to make decisions as to the best use of our funds relative to savings & expenses.

 

[ncpepperman]

Or just pay cash and don't worry about the interest .

 

[Doubeleive]

Or just pay cash and don't worry about the interest .

ya it would be nice have cash on the spot anytime but at least im credit worthy

 

[ncpepperman]

ya it would be nice have cash on the spot anytime but at least im credit worthy

The secret of life Grasshopper is not how much $$$ you make , but how much $$$ you keep.

Rather than spending $5 a day on lunch for 40 years of your working life, take your lunch, put that $100 a month in the bank at a paltry 2% ( it was 10 % 40 years ago , 5% 10 years ago and on it's way up again) .

When you retired , you would have nearly $74,000 to pay cash on a Tahoe or even a Denali..

 

[Doubeleive]

The secret of life Grasshopper is not how much $$$ you make , but how much $$$ you keep.

Rather than spending $5 a day on lunch for 40 years of your working life, take your lunch, put that $100 a month in the bank at a paltry 2% ( it was 10 % 40 years ago , 5% 10 years ago and on it's way up again) .

When you retired , you would have nearly $74,000 to pay cash on a Tahoe or even a Denali..

good advice but some grasshoppers have a peppered past, lol I wouldn't pay $74,000 for anything unless it was a roof over my head, I like to buy my vehicles at about 5 years old after they have depreciated 60%, I have the money to pay this off today but I also use this money for my business and it is a cushion to fall back on if business isn't doing so well as my income can vary widely, I don't mind the payments I set out on this adventure knowing what I was getting into for the most part just didn't realize until recently that I could be saving a chunk of change by paying it earlier than the due date, it was a 5 year loan and I will have it paid off in just a hair over 2 years or less depending on how things go.

 

[ncpepperman]

good advice but some grasshoppers have a peppered past, lol I wouldn't pay $74,000 for anything unless it was a roof over my head, I like to buy my vehicles at about 5 years old after they have depreciated 60%, I have the money to pay this off today but I also use this money for my business and it is a cushion to fall back on if business isn't doing so well as my income can vary widely, I don't mind the payments I set out on this adventure knowing what I was getting into for the most part just didn't realize until recently that I could be saving a chunk of change by paying it earlier than the due date, it was a 5 year loan and I will have it paid off in just a hair over 2 years or less depending on how things go.

No disrespect intended..... just saying that life goes by quickly and there are a lot of $$$ that go out the window that one might be putting away .

Good that you discovered that paying off early was saving you money. All too often , folks only care what the monthly is and not the total they are paying.....

Financed a new 2001 F150 a few months before 9/11. They came out with 0% financing after the Towers but I was stuck with 8%. Paid that sucker off as soon as I could, extra to principle.

Yes, I hear you about the roof over your head, just some thoughts from an "old" guy who also had a "Peppered" past.......

 

[Doubeleive]

No disrespect intended..... just saying that life goes by quickly and there are a lot of $$$ that go out the window that one might be putting away .

Good that you discovered that paying off early was saving you money. All too often , folks only care what the monthly is and not the total they are paying.....

Financed a new 2001 F150 a few months before 9/11. They came out with 0% financing after the Towers but I was stuck with 8%. Paid that sucker off as soon as I could, extra to principle.

Yes, I hear you about the roof over your head, just some thoughts from an "old" guy who also had a "Peppered" past.......

ya I keep my cash on hand as much as possible because for me it takes money to make money even though it's not a lot it works for me, I live rather frugally and I get to live in one of the best neighborhoods in my city so my kids aren't walking outside into a ghetto environment, and if I broke my legs and got layed up for a while I could still pay my bills. I learned a long time ago to "manage" my money, now if I could just manage "women" lol and if I could figure out how to invest what money I do have that would be interesting I only see savings accounts giving out 1.85% on a $10k deposit and don't want to necessarily get into a Roth or something of that nature. I would maybe dive into day trading or something but I need a crash course or seminar to figure out which way to go about it so I'm not just giving my money to someone else in trading fee's like some noob

 

[inmypassatlife]

No disrespect intended..... just saying that life goes by quickly and there are a lot of $$$ that go out the window that one might be putting away .

Good that you discovered that paying off early was saving you money. All too often , folks only care what the monthly is and not the total they are paying.....

Financed a new 2001 F150 a few months before 9/11. They came out with 0% financing after the Towers but I was stuck with 8%. Paid that sucker off as soon as I could, extra to principle.

Yes, I hear you about the roof over your head, just some thoughts from an "old" guy who also had a "Peppered" past.......

I'm waiting to get passed this stupid lawsuit from a car accident 2 years ago to invest my assets. A few more months until then

 

[ncpepperman]

I'm waiting to get passed this stupid lawsuit from a car accident 2 years ago to invest my assets. A few more months until then

The stock market is a good place for long term money. Your safest bet is a Credit Union who is working for their members , not their stock holders like banks. Better rates on savings and loans, check out the CU's on line.

Good luck with your lawsuit.

 

[Wolfbraid]

I just made my payment the other day as soon as I could it took off $60 in interest which made it only $43, 2 months ago when I paid just before the due date it was $149

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Also keep in mind that as your overall principle is reduced your interest each month will be less for example $7000 balance will have a larger interest payment than a $5000 balance, either way paying early and paying additional towards your principle is an excellent financial choice.