Car Monthly Payments?

Question

On a home payment, i have heard that is it better to make 2 payments a month. For example, the mortgage payment is 1000 so you pay 500 the 1st and 500 by the end of the month. it helps pay off the mortgage faster. But does it work on car payments?

thanks

Answer 1

I was suppose to pay part of my car payment once a week.

(which was $65)

But instead I pay in full the first of each month,

it gets it out of my way and makes one less thing

to worry about.

If you are still looking to do it every two weeks

though, it does work like the house payment :].

Answer 2

Car payments amortization rates are calculated slightly differently than mortgage payments.

But it is better to pay more when you can, since the interest will be noticibly less than.  Since car payments are caluclated by APR on remaining principal.

Answer 3

Yes the more you apply to the principle balance the quicker you pay off the loan.

Answer 4

Yes it does, but not as much as a mortgage payment. A car payment generally is for 3-5 years verses a mortgage for 20-30 years. By paying 2 monthly payments, you are paying down the principle faster making  the interest decrease a bit faster causing the end payments to be less. As far as a car loan, you would save 2 or so payments

Answer 5

I'm sure the savings would be minimal at best because of the shorter term of the loan. If you did that, I'm sure it would have to be set up with the lender beforehand. You can always pay more on the payment and that would automatically go to the unpaid balance without setting anything up.

Answer 6

Ok, first of all on your home payment example, it depends on the type of loan you have.  

Theoretically, it does work the same way on a car payment, but the only amount you are really saving is minimal interest.  

Totally ballpark, but you would literally save about 1-3 cents a day (difference in interest) by paying it in 2 payments per month instead of 1.  Over the course of the 60 months, that is about $20 max.

You will save more on a  simple interest loan on a house is a little different because the interest payments are astronomically higher (because purchase price is higher).

Answer 7

As Flanders said it could possibly help if you have the right kind of loan but it will be virtually nothing.

The best thing to do is pay your normal payment every month, and also send them a seperate check and make sure they apply it to the PRICIPLE ONLY. That will shorten the life of your loan and save you money, even if you cant do it all the time or cant pay that much it will help. Just make sure your finance company allows you to do it. Remember the key phrase here is PRINCIPLE ONLY!