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jmontes77029
Posts: 57
Registered: ‎02-11-2009
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Paying more on car payment

I recently financed a vehicle through Toyota Financial services. I was told and sign papers that stated it is a simple interest loan. On my statement I noticed that there is a section state states the way payments are credited. It states the following  "Payments made will be applied first to the current Total Amount Due and then to the next monthly payment(s) due, as applicable." Does this mean if I pay more than amount due it will only be a applied to next months payment and not to principle? Can someone please explain this to me?


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HoldingOntoHope
Posts: 1,057
Registered: ‎09-29-2009
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Re: Paying more on car payment

Yes it will be applied to the next monthly payment. However the net effect is a reduction in the total interest as the amount of the loan due is lower as the interest is calculated. I have a loan with Capitol One that does the same thing. I have consistently applied extra money and still made the monthly payments and when I look at my accumulated interest vs. what the original 60 month interest was going to be I have saved a lot. It will be paid off next month, about 15 months ahead of the original schedule.

Also the advantage is if you do run into an unexpected financial snag you could theoretically skip a car payment for a month or more depending on how far ahead you are paid up. But then the interest accumulation is going to start catching up to you again.

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Cloudlb
Posts: 227
Registered: ‎08-05-2010
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Re: Paying more on car payment

It might be worth a try to contact Toyota Finance and ask if/how you can make extra principal payments. 

 

I financed through my local CU, and when I make extra payments, I have to affirmatively tell them -- "for principal" and then they will apply it that way.  Otherwise, they treat any payments like your regular principal+interest monthly payments. 

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MarineVietVet
Posts: 14,967
Registered: ‎07-14-2009
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Re: Paying more on car payment


jmontes77029 wrote:

I recently financed a vehicle through Toyota Financial services. I was told and sign papers that stated it is a simple interest loan. On my statement I noticed that there is a section state states the way payments are credited. It states the following  "Payments made will be applied first to the current Total Amount Due and then to the next monthly payment(s) due, as applicable." Does this mean if I pay more than amount due it will only be a applied to next months payment and not to principle? Can someone please explain this to me?


I don't know how Toyota handles it but when I was paying on my Honda I could go to the website and make payments that went specifically to principal. By doing that I was able to pay it off 16 months early.

 

Of course the agreement you have with them might preclude this option. It's worth asking them about.

 

 

 

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LAGuy
Posts: 1
Registered: ‎02-22-2013
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Re: Paying more on car payment

You can in fact make a principal only payment to Toyota Financial Services. This is the address I got from a rep. You need to make sure your loan is current and that your loan is processed through the same service center though. Here is the customer service # to verify. Also the rep probably. Will not have a clue what you are asking for so make sure you say, "What is the address for sending a payment to pay on the PRINCIPAL ONLY for my loan."

 

Customer Service in the Continental U.S.: (800) 874-8822
Monday–Friday, 8am–8pm

 

Principal Only

PO Box 9490

Cedar Rapids, IA 52409

 

I hope this helps you.


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