Senior Contributor
Posts: 3,240
Registered: ‎04-03-2008
Re: principle v/s intrest

demo18c wrote:
With Americredit I told them to apply to princinple. With Wells Fargo Mortgage they automatically applied to principle.

Yep, Wells Fargo automatically applies my extra payments to principal, and until I paid off my car loan Chase Auto Finance applied my extra payments to the principal. As others have noted, this varies among lenders so be sure and check the fine print on your statements. Also, keep track of the principal to make sure it is going down as it should be.

In this area, as with many other aspects of lending, it does seem like the more "prime" the borrower the better lenders treat him or her, whereas "subprime" borrowers are much more likely to get tripped up by abuse of fine print by the lenders.

The Mortgage Professor has some spreadsheets that can be used for such calculations:

And here are some general discussions on the Prof's website:

Note: the Mortgage Professor has very little to say about auto loans, but I don't know of any site with better calculation tools. Be aware that mortgage lenders usually do the interest calculation differently from how most auto and credit card lenders do it: usually on a mortgage so long as the payment arrives on time or within the grace period, the interest will be exactly the same as it would be if the payment arrived exactly on the due date, whereas with most auto loans the day of arrival affects the calculations. Read the site and your contract closely.
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