@Anonymous wrote:
Ok so I work 2 jobs one is my normal full time job. The second is just a minimum wage pizza job. I work the pizza job just to get the $100 weekly pay check that I put in a checking account I never use except to pay my car payment. The payment on the car is 237 I pay 350 a month. Now to the question. Should I pay 87.50 a week to the loan or just keep paying one 350.00 payment monthly?
improvingyouth is right especially if you live on your own. You can pay down that loan real fast how you're doing it, but if you can't work because you got hurt and had no money saved then your auto loan won't be paid for however long you're not working.
But to answer your question, and assuming you have 6 month expenses saved: its better to pay 87.50 weekly. Less interest accumulates because your loan is most likely compounded daily. But you have to be careful when you do this, because you want to make sure the extra money goes to principal payment and not your next month's regular payment. Lets say for example you blindly made weekly payments of 87.50:
Week 1: 237 - 87.50 = 149.50 remaining payment due
week 2: 149.50 - 87.50 = 62 remaining payment due
week 3: 62 - 87.50 = 62 towards regular payment, 25.5 to principal balance
week 4: 237 (next months payment due) - 75. You get the idea, it will go towards next month and you don't want that.
So be sure to ask your lender how to make a "principal reduction" payment. With my lender the only way I can achieve this is making one overpayment each month or coming into a branch. I couldn't do this online, which is a bummer. Otherwise you can do bi-monthly payments and it you wouldn't have to worry, although its not better than weekly payments.
Hope this helps.
) //CK:692, Sesame:656
