Pre paying my car loan

by Anonymous Visitor

Question: If my principal balance is 12000.00 and my car payments are 360 for 60 months. How much do I have to pay per month to pay it off faster. When prepaying does it go by the principal balance only? Can I just pay more monthly to pay off my car loan faster or would that even matter?




Answer: Any amount that you pay above and beyond your scheduled monthly payment should be applied towards your principal balance. You'd just want to be sure to call your lender and make sure they apply that extra money towards your down payment and not a future payment.

For instance, if you were to double your January payment some lenders might take that as you making your January and February payment instead of applying that extra money direct to the principal, which would be preferred in you situation.

So all in all, any amount you pay should go towards paying down your loan faster, the amount is up to you and what you can afford. Be sure to mark your check or tell the lender some other way that it's to be applied to your principal balance.

Hope this helps,
Justin