topic Re: Is my math right? -Quick pay off in Auto Loans

Is my math right? -Quick pay off

SSH0126 — Fri, 10 Aug 2012 22:33:49 GMT

Can someone help me figure out how to pay my car off in 1-2 yrs ? I am getting conflicting answers on calulators and etc.. Please PM me if possible...I will send terms

Re: Is my math right? -Quick pay off

pizzadude — Sat, 11 Aug 2012 00:40:38 GMT

In addition to the acutal payment, you'll need to read your contract to determine how your creditor applies additional payments made on your loan ~ i.e. applied against principal or just push the next payment out....

Re: Is my math right? -Quick pay off

SSH0126 — Sat, 11 Aug 2012 00:44:58 GMT

I could not find that information in my contract and some of the paperwork in sunreadable. I have a Santander auto loan if that helps. This is what I was thinking. I have been told via phone ( which is not much weight) that I would have to pay 3months in advance to have anything extra I send to be applies to the principal.

If it is impossible to refinance at this time for a lower intrest rate and we are looking to pay a car loan off in 12-24 months with the following terms and numbers below how much extra would we have to pay per month to pay the loan off in full within 12-24 months?

The payment amount is $509.43
Loan maturity date is : 07/23/2016
Principal amount is : 17,510.88
Accured Intrest: $664.84
Estimated Payoff is $18,175.72

We want to pay the car off as soon as possible because of course the intrest rate..

We are planning to pay the regular payment plus 900 extra a month to have it paid off in mar 2014.

Re: Is my math right? -Quick pay off

Anonymous — Sat, 11 Aug 2012 14:22:31 GMT

What is the interst rate, term of the loan, and is there a prepayment penalty?

Re: Is my math right? -Quick pay off

Anonymous — Mon, 13 Aug 2012 18:55:10 GMT

Make as much extra payments you can and make them (your lender) apply the extra payment towards principal and you should be off the loan soon.

If the apply the extra towards your next months payment than

1. irrespective of where the payment is applied start paying as much as you can OR

2. keep paying montly installment and keep any extra money aside and when you have enough to match the pay off amount that pay off the whole loan in one shot few months down the line wiht the savings

Re: Is my math right? -Quick pay off

SSH0126 — Mon, 13 Aug 2012 19:43:57 GMT

I guess that is an option too. I think we are going to shoot for 1yr and just get it over with.

Re: Is my math right? -Quick pay off

Revelate — Tue, 14 Aug 2012 06:38:38 GMT

@Anonymous wrote:
Make as much extra payments you can and make them (your lender) apply the extra payment towards principal and you should be off the loan soon.

If the apply the extra towards your next months payment than

1. irrespective of where the payment is applied start paying as much as you can OR

2. keep paying montly installment and keep any extra money aside and when you have enough to match the pay off amount that pay off the whole loan in one shot few months down the line wiht the savings

Just curious but why would you ever pick the second option? The APR on the loan is pretty much guarunteed to be above your effective savings rate so you're simply putting yourself further behind by pooling the money in a depository account instead of throwing it at the car loan (or some other higher interest debt).

Re: Is my math right? -Quick pay off

Anonymous — Sat, 18 Aug 2012 16:09:01 GMT

@SSH0126 wrote:
I could not find that information in my contract and some of the paperwork in sunreadable. I have a Santander auto loan if that helps. This is what I was thinking. I have been told via phone ( which is not much weight) that I would have to pay 3months in advance to have anything extra I send to be applies to the principal.

If it is impossible to refinance at this time for a lower intrest rate and we are looking to pay a car loan off in 12-24 months with the following terms and numbers below how much extra would we have to pay per month to pay the loan off in full within 12-24 months?
The payment amount is $509.43
Loan maturity date is : 07/23/2016
Principal amount is : 17,510.88
Accured Intrest: $664.84
Estimated Payoff is $18,175.72
We want to pay the car off as soon as possible because of course the intrest rate..

We are planning to pay the regular payment plus 900 extra a month to have it paid off in mar 2014.

If MY math is right, I would say that your IR is 17.457%

With a range of 15.388% -- 17.457%

This is based on assumptions from the info you gave. I could help you in determining the payoff time frame.....I love math challenges......BUT more info on your part is needed. I.E. you IR.

Re: Is my math right? -Quick pay off

SSH0126 — Sat, 18 Aug 2012 17:15:49 GMT

It is 24.999 percent

Re: Is my math right? -Quick pay off

Anonymous — Sat, 18 Aug 2012 17:45:25 GMT

@SSH0126 wrote:
It is 24.999 percent

Based on the Following:

Amount: 17,510.88

IR: 24.999%

PMT: 1409.43/Month

PIF: in 15 more months

You will have to follow your loan agreement as to how extra payments are made/applied and IF there is a Prepayment pentaly. If your agreement has no such info, it has been my experience that lenders MUST follow YOUR request as to how extra payments are applied.

I.E. On your check/money order, (and you may also want to staple a letter with instructions to your check/money order) give your lender a statement instructing them on how the extra payment is applied. Such as: "Please apply $900.00 to the PRINCIPAL."

Re: Is my math right? -Quick pay off

urbex — Sat, 18 Aug 2012 17:51:37 GMT

@Revelate wrote:
@Anonymous wrote:
Make as much extra payments you can and make them (your lender) apply the extra payment towards principal and you should be off the loan soon.

If the apply the extra towards your next months payment than

1. irrespective of where the payment is applied start paying as much as you can OR

2. keep paying montly installment and keep any extra money aside and when you have enough to match the pay off amount that pay off the whole loan in one shot few months down the line wiht the savings
Just curious but why would you ever pick the second option? The APR on the loan is pretty much guarunteed to be above your effective savings rate so you're simply putting yourself further behind by pooling the money in a depository account instead of throwing it at the car loan (or some other higher interest debt).

I just did a quick calculation on my auto loan running both scenarios. In my case, I compared toss another $100/month on top of the scheduled payment compared to making an extra $1200 payment once a year. Ended up being a 2 month difference in payoff date in favor of the $100/month route. Not a significant difference, but a difference none the less.

That said, I could see the 2nd option being a preferred one, if only to maintain a higher level of cash in the savings account to cover unexpected emergencies which could be a help for those of us a bit cash strapped which I suspect is the case for many of us taking these bad credit auto loans, myself included. After all, if we had a large amount of cash sitting in an account somewhere, we wouldn't be on these loan terms to begin with.

After running the numbers for myself, I don't see any reason why i couldn't throw every extra dollar I've got at my new auto loan, and get it paid off within a year. But then that also leaves me with zero in the emergency fund, which could put me in a huge bind if I have a financial emergency arise.

It also could depend on how the lender applies any extra money sent in. If it's applied directly to the principle balance, then yes, it would be to the borrower's advantage to pay extra on a monthly balance. However, it appears that several (many?) bad credit lenders simply apply any extra funds to the next month(s) payments, basically just creating a "paid ahead X months" situation, so that while you're technically paying the loan off early if you maintain this, the total amount you ultimately pay (principle+interest) remains exactly the same as if you had not been sending in more, thus the 2nd option of holding the extra money in your savings account until you reach the pay off amount will make much more sense assuming, of course, that you're not subject to pre-payment penalties (which I've heard from some people that actually end up being more than if they had just paid the normal monthly to begin with).

Re: Is my math right? -Quick pay off

SSH0126 — Sat, 18 Aug 2012 21:45:00 GMT

anyone had experience with santander?