Last year my car got totaled in a hit and run and I had to take out a loan to get a new one. My credit score was low 500s at the time so I didn't get good favorable offers.
My loan:
APR: 26.95%
Finance Charged: $6983.77
Amount Financed: $8300.00
Total amount after payment: $15283.77
60 payments:
1 payment was $336.12
59 payments: $253.12
Of the $253.12 only $98.16 goes towards
the principle while $155.19 goes towards interest.
I've made 12 payments so far and barely scratched this loan. At the moment of writing this I have $7359.29 left.
If interest builds up daily in a 30 day cycle between payments and I make my payment on time resetting the interest back to 0, would more of my payment goes towards the principle since interest hasn't built up yet?
If I make that $253.12 payment, wait until it clears and immediately do it again, how much of that would go toward the principle?
I'm trying to understand how the daily interest works.
This is the worst loan I have now that's killing me on the payments. I just want the suffering to end. If I need to put my focus on knocking this one out first I will.
I can try to refinance since my credit score is at least 90-100 points higher. Maybe I can get the interest lowered?
I have a 2nd job now to help too.
@Getmycreditback wrote:Last year my car got totaled in a hit and run and I had to take out a loan to get a new one. My credit score was low 500s at the time so I didn't get good favorable offers.
My loan:
APR: 26.95%
Finance Charged: $6983.77
Amount Financed: $8300.00
Total amount after payment: $15283.77
60 payments:
1 payment was $336.12
59 payments: $253.12
Of the $253.12 only $98.16 goes towards
the principle while $155.19 goes towards interest.
I've made 12 payments so far and barely scratched this loan. At the moment of writing this I have $7359.29 left.
If interest builds up daily in a 30 day cycle between payments and I make my payment on time resetting the interest back to 0, would more of my payment goes towards the principle since interest hasn't built up yet?
If I make that $253.12 payment, wait until it clears and immediately do it again, how much of that would go toward the principle?
I'm trying to understand how the daily interest works.
This is the worst loan I have now that's killing me on the payments. I just want the suffering to end. If I need to put my focus on knocking this one out first I will.
I can try to refinance since my credit score is at least 90-100 points higher. Maybe I can get the interest lowered?
I have a 2nd job now to help too.
Yes, refinance with a credit union. Every credit union I know loves to make car loans. And their interest rates are much better than these predators.
@Getmycreditback wrote:
At the moment of writing this I have $7359.29 left.
See extra payment savings below
If I make that $253.12 payment, wait until it clears and immediately do it again,
how much of that would go toward the principle?
With most loans all of it, if made the same day.
No need for the first to clear if one pushes a payment or sends extra by check.
It is applied when they receive the funds.
I would set up bill-pay service from checking to push extra money when ever I wanted.
I'm trying to understand how the daily interest works.
Math in photo below
Most auto loans use monthly numbers to
calculate term payments, print statements, and
update web base loan numbers.
However interest is usually calculated in the background daily. (not always)
Issuers usually default to one of three common methods for calculating interest rate.
Some institutions use a simple 360 day per year, some 365 and
still others a rate that is even more favorable to the issuer called "365/360"
The issuer picks the rate method, so it is what it is.
The main idea whether it is monthly or daily simple interest :
The more you pay, the earliest you can, the more you save.
I have a 2nd job now to help too.
If you have extra funds to apply to the loan every month, it will
lower the interest you lose and pay down the loan faster.
The larger and sooner the better, however consistent monthly small numbers
also add up quickly.
As @SouthJamaica said.
If you can, get a better loan.
If not, here are some options.
Extra Payment Savings:
Loan: 7359.00 @ 26.95% with Pmt:253.12/mo (Current)
48 months & $4702 interest
Loan: 7359.00 @ 26.95% with Pmt: 300.mo
37 months & $3454 interest
Loan: 7359.00 @ 26.95% with Pmt: 350/mo (Extra 100)
29 months & $2712 interest
Loan: 7359.00 @ 26.95% with Pmt: 400/mo
24 months & $2241 interest
Loan: 7359.00 @ 26.95% with Pmt: 450/mo (Extra 200)
21 months & $1916 interest
Loan: 7359.00 @ 26.95% with Pmt: 500/mo
19 months & $1675 interest
The Math:
I use the rate formula favoring the issuer in this example
with your loan balance, rate and a 30 day month
Check your paperwork, but any extra payment amount at any time should reduce the amount of nterest you will pay overall whether it pushes back your payment due date or not.
A simple interest loan should be ... simple.
Pay an extra $100 per month and look for refinance options. Both will help tremendously.
Check Cap One for refinance. They are a good lender for things like this.
The lender is OneMain Financial
Thank you everyone for the replies. I will check with them today to see if I can make principle only payments and if there's any extra fees for paying it off early.
