topic Re: Capital One Auto Approval but need advice on loan in Auto Loans

Capital One Auto Approval but need advice on loan

Anonymous — Thu, 09 Jul 2020 09:02:54 GMT

Hello everyone! So I will be brutally honest.. I did not expect to be approved for a car loan given my current scoreboard and recovery. I bought a used 2017 Toyota Camry XSE 30k miles for 16k with interest totalling up to 23k in total. Loan was approved at 9% 60months (Yes its bad, but not the worst given my current auto score 620). Unfortunately I had a few issues with the dealer who attempted to scam me and add on additional charges but declined everything. All together my monthly payments are 380 with 1k down. I want to know if this is true because my uncle told me he avoided paying so much interest because he paid off the principle amount in less than 2 years which was indeed a new car, "good" credit, and about 25k. Is it entirely possible to avoid paying all that interest if I pay off the loan ASAP? My monthly take home after taxes fluctuates but is roughly between 3.7k - 4.3k per month. The reason I bit the bullet was because I constantly use uber and lyft services to go to work, home, shopping, etc and it can take its toll per week. Monthly I spend 1.3k on both services which in total since 2017 I've spend 21k on lyft and 23k on uber (Believe it or not it's true). This is my first car and after taking it to a family and professional mechanic and toyota dealer for a check up, they deemed the car far worth more than its price tag and it being in "Excellent" condition. So yay! I understand interest will occur, but capital one told me there would be no prepayment penalties and I am allowed to pay the loan off at any time. The rep on the phone was really nice and guided me through it step by step. So with that being said, how should I go about paying the loan off quickly? Should I pay the same amount per month as I did with uber/lyft (1.3k) or larger payments? I apologize for the long read. What are others experiences with car loans and avoiding the interest tag?

Re: Capital One Auto Approval but need advice on loan

Shooting-For-800 — Thu, 09 Jul 2020 12:05:20 GMT

It is a simple interest loan.

Your balance determines the amount of interest you pay each month.

If you double your car payment each month, you will pay it off in less than half the time and pay much less than half the interest.

Re: Capital One Auto Approval but need advice on loan

Anonymous — Thu, 09 Jul 2020 19:47:43 GMT

You want to make sure that anything extra you pay every month is towards the principle. If you just send in 500 bucks on a 300 note, next month, you payment will only be 100 as they apply the extra to the next payment. But if you tell them the extra 200 is for principle, it will not effect the next month's bill and the 200 will go towards paying off the principle.

Re: Capital One Auto Approval but need advice on loan

Shooting-For-800 — Thu, 09 Jul 2020 22:37:11 GMT

@Anonymous wrote:
You want to make sure that anything extra you pay every month is towards the principle. If you just send in 500 bucks on a 300 note, next month, you payment will only be 100 as they apply the extra to the next payment. But if you tell them the extra 200 is for principle, it will not effect the next month's bill and the 200 will go towards paying off the principle.

It is a simple interest loan. Extra pay goes to principle automatically. Some lenders will reduce future payment some will not. Regardless, the interest is still calculated the same. Interest is calculated each month on the remaining balance.

Cap One requires a monthly payment regardless how much extra one pays in advance.

Re: Capital One Auto Approval but need advice on loan

Shooting-For-800 — Thu, 09 Jul 2020 22:56:35 GMT

OP - 9% is really not that bad considering your scores. Hard to get under 4% with ANY score, so...

If you payment is $380 at 9% your loan is for = $18,250

$380 per month x 60 months = $22,800 total

$454 per month x 48 months = $21,792 total ... you save $1,008 in interest

$580 per month x 36 months = $20,880 total ... you save $1,920 in interest

$834 per month x 24 months = $20,016 total ... you save $2,784 in interest

$943 per month x 21 months = $19,803 total ... you save $2,997 in interest

So you can save $3,000 in interest if you pay $943 per month on time every month.

I would just pay $600 per month and save the rest if I was in your position. You save $2k in interest and pay off the car in 3 years without strapping yourself each month.

Re: Capital One Auto Approval but need advice on loan

Anonymous — Fri, 10 Jul 2020 02:11:14 GMT

Wow thank you for the replies! One of my worries was the fact that some companies do have a prepayment penalty or even dislike the fact one would prefer to pay it off quickly to avoid interest overall as it means the bank doesn't make so much on the loan. However, the Cap1 rep was nice enough to explain things step by step and even encouraged me to pay off the loan to save money as quickly as I can. Just wanted to make sure that I can add in a large chunk of additional money with a better outcome. With my baddies all falling off and now an auto loan... With prompt on time payments my credit will go through the roof! Pretty excited.