I have a question regarding car payments: I made 2 manually and it was towards the principal (principal or interest as options). Then last month was the first payment for recurring payment. It automatically went to principal AND interest. But most went to interest and less than $10 towards the principal. Is that ok? What’s the best way to do it?
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For your recurring payments you will pay significantly more interest than principal for the first few years and the amounts will fluctuate monthly. Yes I would keep making principal only payments when paying extra.
Hmm, when you pay principal only then you aren’t paying on the interest. So I’m guessing that because you only paid principal, the interest that accumulated was paid with your auto payment. You may have owed interest which was paid by most of your most recent payment.
If you’re going to do a principal-only payment then that should be an extra payment for the month, not the only payment, if that makes sense.
@ekko, thank you. I will continue letting it go to both.
It’s suppose to go to both on your normal payment. If you make an extra payment you can choose principle. But your interest rate must be extreme to only have $10 of your payment going to principle on your reoccurring amount. You’ll never pay off that car.
@whereswaldo, so…if I make multiple double payments, the interest payment decreases? Please don’t judge me…A didn’t give access to money and I really don’t know shit about payments and my car (and it’s payment) is the only thing I have in my name.
@bodybycheetos, well there’s less interest to charge because your balance is smaller and your number of total payments due decreases. So if you pay off your car 6 months early you’re not paying the interest you would have on those 6 months had you paid only the required minimum agreed upon when you purchased it. So yes you’re saving money. If you have the option to view your pay off amount which is the amount you’d pay right now if you paid your car in full today you will notice the amount is less than the balance it says you owe if you didn’t do a pay off today. Sorry if that’s confusing.
@bodybycheetos, SAME lol. And as you can see I feel so dumb that I only felt comfortable asking my internet people on Mom Life instead of the people I know in my life haha
This is so they ensure they get most of their interest payments before you can have a chance to pay off the car before it’s time.