@Skye12329 wrote:
So DH and I financed a 2015 Mitsubish Lancer, total cost after everything said and done 20k the interest rate isn't the greatest but not the worst either. We got a 8% rate and we chose 72 mos since we wanted a slightly lower monthly payment. We do plan on paying it off earlier since any extra money we have is going towards this loan.
My question is: It says total amount financed is 20k. If we pay extra each month, the monthly payment should go lower correct? Also the extra money should go to the prinicpal also right? Meaning we would owe less interest also. I just wanted to get these clarified. This is our first auto loan. Its also through Chase which surprised us.
Chase has a great interface on their website to make your payments.
You can direct your extra payment to extra principal paydown very easily. You do have to make the regular payment and then whatever extra you decide to pay toward the principal is a separate line item.
If you pay extra and don't designate it as extra principal, then it will apply to the next months payment. I like using both of those features.
If you choose to make extra principal payments you will save interest on the overall loan but as stated above, it will not decrease your payment - just reduce the time you have to pay it off. Said another way, instead of taking 72 months to pay your loan, if you make principal reductions you may be able to pay off the loan in 60 months or whatever timeperiod depending upon the size of the principal payment. You can experiment on bankrate.com with an auto loan calculator to see what is comfortable for you.
