Yurka

So i just got myself a rx two months ago. After i did a trade in, i had 27k left to pay out within the next 5 years (60 months). With that remaining balance, my monthly payments were estimated to be little bit more than 400$. When i got my 1st statement, i paid 17k leaving exactly 10k to be paid over the next 5 years, so that way if something happens, i will have work problems or for whatever reason my monthly payment should be under 150$ which is pretty low and i could afford that no matter what. However today i got my 2nd statement, it does say that i have 10k left as a remaining balance, yet my monthly payment is still 400+$. I am quite concerned about it, because when i spoke to the financial department guy at the dealership, he explained it to me, and said if i do like i did i would indeed get a lower monthly payment, because 10k for 5 years is 100+$ not 400+$, this way it will be easier to pay off. Am i getting or understanding something wrong, could someone explain it to me, im only 21 and im not really good with finances, maybe im not understanding something.

markrivers

You're remaining balance posted as 10,000 which is a good thing, meaning that your large payment was posted.
Now, here's the thing, instead of the original 60 months, right now you're probably looking at 25 months with the same 400 plus payments.

I used to have a 48 month financing with $651/ month. I would normally " overpay" but not as much as you.
Say 800 for this month, 1,000 the next then 651 on the 3rd month etc.
my monthly statement stayed the same but the " principal" goes down a lot faster than expected.

I short, i was able to finish my financing in 30 plus months with no early termination penalty.

velopod

Really, you shouldn't have paid the 17K down either. Most new car deals are down under 3% for financing (got my wife's RX for 2.9% for 48 months) so always better to use other people's money! My 50K sitting is making over 10% right now with the raging market(s), so no reason to pay off early with simple interest. If markets tank and cash is king, then write a check for the balance and be done.

Should have taken that 17K and simply invested it properly and made ~ 10% return (or 7% profit if your loan is 3% for example). Back when car loans were more than market/investment returns, pay cash for the car. Put your money to work for you!

Yurka

well my contract/ deal states that i have to pay off the price over 60 months under 1.99% APR with that on a paper it says after 60 months i would overpay only $1400, but as part of the deal was that if i pay it sooner, then i overpay less money, thats how dealer explained it to me,and that was the plan, pay this month 400$ lets say, next one 200$, then 300$ or what ever, depending on my financial stability. Also i got $60.60 like a principal balance, could someone explain what the hell is that? And do you mean that now since i have $10.000 left and even though my deal says i have 60( technically 58 more ) months to pay it out, it now automatically got shortened instead of remaining still the same(60 months) and just minimum monthly payment go down?? Sorry, im just quite confused with this thing, its my first time financing something and im pretty lost, on top of that this and next week is a final week so im stressing over school , just too much.

dctex99

NO ONE has answered your question; only chastised you for paying early. You ALWAYS have to rewrite the loan when you do that; so contact whoever has the paper and tell them you want to refi the remaining amount for 4 years, and you will have to sign all new papers. There is no Automatic lowering of payments if you pay ahead!! Sounds like a pretty stupid F&I guy, which is not unusual; they don't need a degree in Finance to do that job, just another car salesman job!! You should be able to get 2.5% on 4 years on the remaining at a Credit union.

Yurka

Hmm i see, so what i can do is, go to the dealership, and tell them to redo the paperwork and break those remaining 10.000 over the next couple of years?

ecr72

I'm not sure the dealer can help you. If your loan is with LFS, call them for guidance. Or, go to a credit union with a good refi rate and get a new loan.

I was making double payments on my Altima and paid it off a year early. My statements would show odd principal numbrs but they made sense. What they also did (Nissan Financing) was extend the due date of our next payment. So for example, if we made our first double payment in January, our next due date would be March. When we made a double payment the following month (Feb) the next due date was May. So you may want to inquire about that. If your rather large payment pushed out your next due date a few years, that may give you the padding you're looking for without having to redo your loan.


Posted from ClubLexus.com App for Android

UCSB

Just shop around for a low rate and refinance your loan at a credit union, bank or other lender. Then you will have the low payment and low interest rate you want.

vlad_a

IMHO, do nothing. Just keep paying your regular monthly payment. You will simply pay off your vehicle sooner. The key is always the % you pay. It is the percentage on the money owed. The more you owe, the more you pay to the bank. The higher the percentage, the more you pay to the bank. Both of them are low now. You'll just end up pay off your car sooner, that's all. If you do refinance, you will pay a higher interest rate. More money to the bank = less money for you.

Now, if you have any other debt that is at a higher percentage rate, pay that off first. Then move on to the lower percentages.

Personally, I don't like the idea of investing money and expecting a 10% return. That is not a guarantee, therefore a gamble. We all know how things turned out just a few years ago. My opinion - never gamble with money you can't afford to loose.

Yurka

okay, and this principal balance of $60.60 will it appear on every statement or i just have to pay it once?

1koolfella

iTrader: (1)

Also double check your statement shortly after you make your next payment. Just as how DCTEX99 said, just because you over pay that doesn't mean they will adjust your monthly amount due. But depending on who you're financed with they might change the amount that goes towards the principle so that it is stretched out that 60 months.

For example my loan is financed through Chase (aka the devil in a blue dress imho), I've made a few over payments and it was credited towards my PRINCIPLE, and just like you my monthly amount due has not changed. But what has changed is when I make my monthly payment, more is going towards the interest and less is being distributed to my principle. For example, my monthly payment is around $400, out of that $400, around $20 is going towards the interest and the $380 is applied to my principle. But if there's a month I make an extra payment towards my principle and still pay the amount that is due monthly, I notice around $60 is going towards interest and $320 is going towards the principle.

I'm assuming they are doing this to make up to the expected amount of interest they were expecting to collect on the loan.

viperdoc

I am usually a fan of paying off car loans ASAP to avoid paying a lot of interest. But as someone said earlier, with interest rates so low right now, I chose to not put anything down. I am at a 0.75% for 72 months. On a $52K car, I pay only $30 per month in interest. .

vlad_a

That's smart. At that interest rate, there's absolutely no reason to pay it off early... unless that is the only debt you have. Even then, better to put extra money into ROTH IRA.

kitlz

A few posts have been deleted. Please keep the comments constructive.

Yurka, it's unfortunate the finance person led you to believe your payments would be less by making a larger payment. As you found out, it only affected your balance which is now down by about two thirds. Your monthly payments will remain the same until you pay the full balance. But you will pay the loan and own your RX sooner.

Some points to consider, if you refinance the remaining balance, your monthly payment will decrease but your interest rate will probably be higher. While I can appreciate your desire to have the lower monthly payment, you'll be making those payments over a longer time and potentially could cost you more in the long run. There's also no guarantees you can get another loan. You've recently purchased your RX. More inquiries on your credit is not a good thing, even more so if you expect to get another type of loan in the near future.

I'd also consider how long you plan on keeping your RX. Let's say in two years you decide you want to sell. Chances are if you keep your current loan, you'll own your RX. But if you refinance, you'll still have to pay off a significant portion of the refinanced amount. That'll cut into what you'll get. Or it can be rolled into a new vehicle loan which will increase those payments.

Finally, vehicles are a depreciating asset. While you won't have to worry about being upside down (owing more than the vehicle is worth), lengthy car loans are generally discouraged. I commend you for making an effort to decrease your debt at your age. Keep it up and you'll have a successful financial future.

bextreme1

You might want to check your statement. I always pay more than my payment and when the bill comes it says minimum payment due = 0. That was with chase, lexus and bank of america. Then I don't have to pay for a few months if I don't want to. You shouldn't owe anything for a few years!