Monthy payment decreases?

[shaybe]

I have a 60 month $12k auto loan from Wachovia at 14.99% and a monthly payment of $290. Because of the high interest rate I've been sending in just a little extra. I've only paid 3 months so far but I've paid $300 to $310 each time. This month's bill is only for $260.

I assume the decrease is the banks' effort to get me back on the 60 month pace, but my question is, if I have a rough month and can only send in the payment they're requesting, will I have un-done my attempt at getting ahead? This is my first auto loan and I'm trying to figure it all out!

Thanks!

[Takunda1]

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shaybe wrote:

I have a 60 month $12k auto loan from Wachovia at 14.99% and a monthly payment of $290. Because of the high interest rate I've been sending in just a little extra. I've only paid 3 months so far but I've paid $300 to $310 each time. This month's bill is only for $260.

I assume the decrease is the banks' effort to get me back on the 60 month pace, but my question is, if I have a rough month and can only send in the payment they're requesting, will I have un-done my attempt at getting ahead? This is my first auto loan and I'm trying to figure it all out!

Thanks!

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Your extra payments are not being applied to your principal. You need to actually call and tell them that the extra you paid needs to go to principal. The reason why you payment is lower for this month  is becasue they are applying the extra cash you are paying to your next months payment.  So technically you are not saving anything on interest.

[shaybe]

*gasp* you mean the car salesman LIED to me when I specifically asked if extra payments would go towards my principle?

Ugh. I'll contact Wachovia.

Thanks for your help!

[emoticon]

I think it depends on your agreement.  From my experience, any amount paid over the regular payment went toward principal.

[Anonymous]

This has been my experience as well on the two auto loans I've had. In the past I've made two payments per month here and there. Everything was applied immediately but they bump the due date out for me so I could skip a month if I wish.

[Anonymous]

Happy Labor Day shaybe,

First of all, Congratulations on your new car loan!

The first one is always the one we remember the best...

All things being equal, if you don't actually tell the bank to apply your

extra payment towards principal, they will apply it towards your next

regular monthly payment. That's why the amounts **appear** to be smaller.

So to avoid confusion in the future, I'd recommend that you make 2 separate

payments - your normal monthly car payment of $290 (principal + interest)

and a 2nd payment for principal only (the "extra" $20-25 you sent in before).

Also, you might consider setting up both  payments online so it's automated...

which means everything will be tracked and documented. Once both payments

post to your account, call the bank the first month or so to verify that everything

is OK. Online payments are cool, but it's always best to speak to a real person.

Since your interest rate is so high, you're smart to pay extra each month.

Just make sure you set things up so you actually get credit for what you want

 to accomplish. Then follow up with a call/personal visit to the bank until you're

comfortable that everything is going as planned.

Once again, Congratulations on your first loan. Please keep us posted on your

progress. Enjoy the day!

CanDo

"The right attitude is everything"

[shaybe]

Thanks for your help.

It doesn't look like I am able to set up two monthy payments on their website. There's really not many options on there at all. In fact, they didn't even give me any customer service phone numbers on their dealer services site at all. I had to go to the main Wachovia site to get one.

But, now I have their number and I'll try to remember to call tomorrow on my lunch break. The dealer set up this loan so I've never even talked to anyone at Wachovia before. That's probably bad, huh?

[Anonymous]

Hi again shaybe,

It's not necessarily a bad thing that the dealer/finance manager

setup the loan for you.

If you look at your loan documents, there should be a toll-free

number listed directly to Wachovia's loan department. This way,

you can skip the calling tree altogether (for deposits, Press 1; for

credit cards, Press 2 kinda thing).

And you can always walk into any Wachovia branch and make a payment.

Yes, it takes time out of your day, but it's important that you get things setup

correctly the first time so you don't waste time (or money) down the road.

While you're in the branch you might consider speaking to a senior loan officer.

I'm sure he/she will give you suggestions on how best to handle extra payments.

You'll also have a point of contact in case problems arise in the future, so make

sure you ask for their business card. The personal touch is always best.  

So if you can make your regular monthly payments online and you're good with that,

by all means do so. But you might be better off making principal payments in person.

The teller will give you a receipt of the transaction and you'll be able to see in

black & white that the extra money really does go towards reducing the principal.

Hope this helps you. Enjoy the day!

CanDo

"The right attitude is everything"

Message Edited by CanDoAttitude on 09-01-2008 09:35 AM

[Anonymous]

One last comment, shaybe:

It's not that the dealer gave you a "bad" loan. It's more to do with the bank.

As I'm sure you know, Wachovia got caught up in the whole subprime

mortgage fiasco. They lost a LOT of money, so they need to correct that

situation...and quickly.

They want you to make your regular car payments early or on time.

That's why you can do so on their website.

There's also no prepayment penalty on your car loan, so you can pay it off anytime.

But Wachovia doesn't necessarily want you to do that. That's why you didn't see

anything on their site that lets you do this in a convenient fashion. So you'll have to

take the initiative and go into the branch yourself, mail in a separate payment, etc.

in order to make this happen. This is not bad service..but it's not their best service

either.

In other words, Wachovia is trying to create a balance between serving the

customers' needs and generating a lot of cash flow to satisfy their shareholders.

And they aren't the only bank in this predicament.

So as far as your situation is concerned, going into the branch or calling Wachovia

to make a principal only payment might be your best bet.

Hope this helps you, shaybe. I'm just "reading between the lines" and saying the unsaid.

But it's stuff you need to be aware of now that you have a loan with your name on it

with Wachovia.

Enjoy the week!

CanDo

"The right attitude is everything"

[shaybe]

Thanks for all your input, CanDo.

I have the Dealer Services number I got off of their main site. I will have to call during lunch as I work M-F during business hours. If I ever get a day off I might stop by and talk to them.

Yes, I understand the banks' pain right now. I work in the foreclosure industry and we have definitely been busy lately. I understand mortgage loans, but I'm unsure of how much they compare to auto loans so I'm a little lost here.

Happy Labor Day!