Dave
WR,#2Consumer Comment
Sat, February 21, 2009
Nikki is correct on how interest is applied. I would also like to add that when payments are made money is applied to finance charges (interest) and late fees first then towards principal. If you would like to save on some interest pay on your account bi-weekly
Nikki
Coconut Creek,#3Consumer Comment
Thu, February 19, 2009
First, go online to a loan amortization spreadsheet and plug in your loan amt, the interest rate, and the terms. You will see your payment. Ask the website to give to the breakdown and you will see how much you should owe after 9 payments and about what your daily interest should be. This only works if you have made every payment on exactly the date it is due, but it will give you a general idea if you haven't. On most auto loans, interest is figured daily, but compounded monthly. For example, say based on what you owe and your interest rate, this month's interest is $5 per day. Your made your last payment on January 20, and are now making this payment February 20. That is a total of 31 days. 31 days x $5 per day = $155. So, out of your payment, $155 goes to interest and the rest to principal. Say you make your next payment March 15. February 20 - March 15 = 23 days. So out of your March payment, $115 goes to interest and the rest to principal. Then say you make your next payment April 25. March 15 - April 25 = 41 days x $5 per day = $205 to interest and the rest to principal. Say the next month you are 20 days late to = 51 days since your last payment. 51 x $5 = $255, plus maybe a $20 late fee. If your payment is $200 and the money charged to that payment is $275, you are in the hole for the next month by $75. These numbers I have used are just examples, but I hope you get the drift. Take a deferment and it really gets screwy. So, it all depends on the date of your previous payment how much goes to principal and how much goes to interest. Plus, if you have any late fees attached, you may see some payments don't go to principal at all, only to interest and late fees. They probably wanted you to pay the interest for the days you were late. I like to call it "late interest" rather than "late fee". An actual late fee is usually assessed when you are 10 days late and does not go to interest or principal. Merely into the pocket of your finance company. Your payment less interest and late fee was probably $8 short with nothing going to principal. Next time you are late, you need to figure out the approximate daily interest and add that to your payment x the number of days you are late, plus any actual late fee. Based on your loan amt and payment, it looks like you got a really good interest rate. You need to pull out that financing paperwork to make sure it really is only 48 months.