No payments for up to three months

[CreditBob]

Most of us have seen the car, SUV, & truck loans to which you do not have to make your payment for up to the first 90 days. Please keep this in mind. On day one, from the time you sign your loan papers, the interest accrues and is compounded on a daily basis. So, by the time you finally make your first payment, all the interest adds up. This sum amount will be higher than the original amount that you signed for. 

Here is how to figure out the daily interest that you will be charged.

You just bought a truck or SUV for $ 40,000 with an interest rate of 7.5% (example). Your first payment is not due for 90 days. Take $ 40,000 and times that by .0750% (interest). This would equal an annual interest fee of $ 3,000. Take that $ 3K & divide by 365 (how many days there are in a year) which would equal $ 8.22 of interest per day charged before any principle payment is considered. Then take $ 8.22 of interest per day & times that by 30 (number of average days in a month. The total of interest payments without principle being applied will be $ 246.60 which is more than the original amount. Then you recompute the new interest after that. Always go off of what the new balance is. In other words, the daily interest will just keep increasing if you do not immediately start making payments. I am aware that some may not be able to do this because of different financial situations. I wanted to share this because on the last two auto loans with the credit union, I made the first payment on the same day that I signed the agreement. Then I made additional payments to keep the interest under control 2 to 4 times per month. 

[Horseshoez]

I took the reverse approach; given my interest is 2.49% and many savings accounts are now paying more than 5%, the longer I go before paying, the more money I make.  Yes, I'll pay more interest, but I'll make even more in the interest paid to me.

[sccredit]

That's how I handle my 3% loan on my car. For DW's new car I elected to start paying right away at 6% because my HYSA is 4% and CD at 5%. I'll redirect all energy toward paying hers off early vs mine because of the rate.

[LakeLife]

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@sccredit wrote:

That's how I handle my 3% loan on my car. For DW's new car I elected to start paying right away at 6% because my HYSA is 4% and CD at 5%. I'll redirect all energy toward paying hers off early vs mine because of the rate.

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We bought our lake house in late 2021, and I was peaved at the interest rate being 4.375%.  It was a 2nd mortgage for us, and rates had started to creep up, so we didn't get the rate I was hoping for as compared to our main house's 2.5%.  We made extra payments for the first year or so to lessen the interest for the term of the loan until rates started to creep up past 6%.  Now we still make extra payments, but for lesser amounts, and I feel great about the interest rate.  It's crazy how things work out sometimes.