Pay towards your principal?

[mek]

To people who finance with Acura finance, what happens when you pay more towards your principal? Reason why I ask is I drop 5k on the principal and nothing has change. I still have a monthly payment due for next month and my monthly payment and monthly term is still the same.

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[jedi03]

it reduces the time on the loan when you do this. They normally take the interest first and then payments go toward principle. If you put money down before the loan starts then your monthly payment is less, but unless you refinance your loan your payments remain the same

 

[Underdog]

^ Exactly. Check your principal balance - the extra money went towards that. Next months payment will be the same, but more will go towards the principal now since there is a smaller balance being charged interest, so you’ll pay it off faster and save money.

 

[mek]

So my monthly term would go down? So instead of 72 it'll be 62 months?

 

[Underdog]

Yes but they don’t usually show you the new payoff date, you need to calculate it. They think my loan is still going to 2029 but it will be paid off this year.

 

[NoelPR]

You just reduce your interest responsibility, and as others said, shorten the life of the loan.

 

[slowcountry]

It could be worth refinancing if your interest rate is high- local credit unions usually carry the best rates on that. But if you got a promotional interest rate, that's probably the best available right now.

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