If I make a large payment on my auto loan, half of the purchase $, will that reduce my monthly car payment?
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I am taking out a (new used) auto loan, no choice to wait, emergency situation. It’s a high interest now, but in about 3 months I will be able to pay off half of the purchase price. Does anyone know if this will lower my monthly payment when I send in this large payment? Or will I still have the same payment until the balance is paid off? I don’t know how these loans work. Thanks,
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STEVEN F said:
It will not reduce the monthly payment. It WILL drastically reduce the balance and result in fewer payments and less total interest paid. If may also allow you to refinance the balance with another lender at a better rate.
I would recommend attempting to find a less expensive vehicle you can pay cash for that will suffice for 3 months. You can then sell that car and add the ‘large payment’ to pay for an upgrade. Combine that with buying from private parties instead of dealers, and you may be able to own a car similar to the one you are looking at ‘free and clear’ by Christmas.
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0February 22nd, 2010 at 2:30 pm -
sassy2 said:
No your monthly payment stays the same the large lump just shortens the length of the loan
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0 0February 22nd, 2010 at 2:30 pm -
LowClassCC said:
your payment will be the same until the loan is paid off but you will save a lot that you would have paid in interest.
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0 0February 22nd, 2010 at 2:30 pm -
Suzette65 said:
No, it will not lower your monthly payment. If you apply the payment to principal only, it will lower the lenght of time you have to make those monthly payments. If you are really looking to have your payments lowered, you have two options.
The first, see if you can get a lower payment up front. Second, try to refinance your loan after you have made the large payment.Like or Dislike:
0 0February 22nd, 2010 at 2:30 pm -
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0 0March 7th, 2010 at 6:36 am -
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0 0March 7th, 2010 at 11:46 am -
Polly Kahan said:
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0 0March 7th, 2010 at 6:19 pm
