When I had a Cap 1 auto loan they would only apply any payment overage to the follow on payments instead of directly to principal I'm not a loan expert, but I do know that with the extra payments I was able to reduce the term of my loan from 5 years to just under 4 years and I'm sure I paid less than the total on the original contract stated if I had just made the 5 years of payments.
In other words, I didn't try to figure out if applying to principal directly made a difference in the remaining interest. What I did like was the idea that if I ran into unexpected difficulty I do could have not made a car payment for one (or several) months without a negative impact on my credit. I do know that the interest accrued daily, as looking at their site it would give me varying payoff amounts depending on the day I selected. In my mind I think it was a wash - applying the extra to future payments.
