GM Financial - Payment allocation

[CountryLivin]

I was just wondering, when I make my car payment, I always pay more then the minimum. Does GM Financial apply the excess to the principal balance or to the interest. I've been paying on my car since February and never thought about it before. Do I need to call them and request that they do it?

[Appleman]

Almost all auto loans are simple interest loans. Each day you accrue interest on the balance that day.

By paying extra, your principal will decrease and you will accrue less interest.

USBank and USAA update my balance owed daily and I can see what my daily interest charge is day to day.

NFCU and PenFed do not reflect daily changes, only updating the balance as payments are made.

So, you are getting credit for the extra payment.

Some lenders may credit the extra payments toward future payments which may push back your next payment due date. Just continue to make the monthly payment to keep the gains.

Hopefully that answers your  question.

[CountryLivin]

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@Appleman wrote:

Almost all auto loans are simple interest loans. Each day you accrue interest on the balance that day.

By paying extra, your principal will decrease and you will accrue less interest.

USBank and USAA update my balance owed daily and I can see what my daily interest charge is day to day.

NFCU and PenFed do not reflect daily changes, only updating the balance as payments are made.

So, you are getting credit for the extra payment.

Some lenders may credit the extra payments toward future payments which may push back your next payment due date. Just continue to make the monthly payment to keep the gains.

Hopefully that answers your  question.

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Thank you! That's what I needed to know! :-)