If you're thinking of paying off your Ally Auto loan early, you're in for a painful process.

[DeeBee78]

I have an Ally loan with a 72 month term and I am currently 14 months into it. Right now I am in a position to start paying much more towards the principal, to the point where I will have it paid off in 24 more months, or so I thought.

I already pay a bit more than the amount due each month, always choosing the option to apply the extra towards the financed amount, which is the closest thing Ally offers to making a principal payment. In January I am ramping that up to $1,000 a month and I wanted to set it and forget it. Well you can't with Ally. If you setup automatic payments, any additional amount will go towards future payments. There is no way to setup automatic payments that put the extra towards the financed amount. 

Ok, so I thought I'd spend 20 minutes and setup every payment manually for the next two years. Nope. You can only setup three payments in advance. That means every three months (or less) you need to log back in and setup more manual payments. So you want to pay off your Ally loan early, you have to micromanage it until you complete it. 

I am thinking about just pulling the money out of savings and paying the thing off now, but I am expecting a bit of a windfall in December, and a nice bonus in March that I would rather use for it. Can't wait to be washed of them. 

[jeffm4688]

Auto loans are simple interest, where every payment goes towards the interest that has generated since the last payment and then towards principal. Interest reduces over time as your principal naturally decreases. You're overthinking this. Them "applying the extra towards the next payment" isn't it going towards the next payment due its just their system knocking the due date further out because of the fact that you're paying ahead.

I've paid ahead on every auto loan and they all do the same junk where they move the due date further up but it doesn't matter as every payment you make goes to interest and then straight to principal.

You can verify this by looking at am amortization calculator. but eventually if you just keep paying the principal will drop to 0 and the loan will close years ahead of time. 

[MyDataMyChoice]

mail in the payments in Bill Pay