If I send $50 extra with car payment each month,do I just send it or specify it to principal,to lower interest

Question

If I send $50 extra with car payment each month,do I just send it or specify it to principal,to lower interest

Answer 1

you have to say its to principal. send it in a diff payment (like two checks). I am going thru this now. when I just sent one big check they took it off my next months balance.

Answer 2

I would call the lender first to see if you can send in an extra payment.  If it's OK, any money you send will be applied to the principle.  The interest rate won't and can't change unless it's a variable rate, but extra payments won't ever affect the interest rate.

Answer 3

Just send it they will apply it to the loan this will reduce your debt.

Answer 4

you need to state that it is to go to the principle!!! or they will just apply it to the next month's payment!!

Answer 5

Depends on the institution you send it to. Usually any extra amount is applied towards the principal. This does not lower the interest, it lowers the amount of interest you pay. Usually what will happen is your payments stay the same and the amount of principal increases while the amount of interest decreases until the principal is paid off. Beware of any pre-payment fees that can be associated with any loans. These type of clauses in the loan contract insure that the loaning institution will get there money.

Answer 6

You need to clearly state that X amount is for the monthly payment and that $50 is go towards the principal balance.

If you do not state this, whoever processes your payment will either use that amount to cover any late fees (if you have them) or towards your next monthly payment.