Resolving an argument - car loan, after payment decision refinancing really big? If you plan to refinance your car loan in a few months (at a much lower interest) What is the logic of paying a lot of money now for the company holding the loan at high interest now?
Seriously, I'm missing the logic here. Would not it be smarter if you have a bit of money (which is equal to three high interest rate payments car loan) why do not you just make your normal payment for the months coming to refinance at a lower rate and then pay the big chunk of money?
auto loans renowned modern financial institutions must be taken with a simple interest - you pay a portion of your payment of interest and is the main part of each month. That being said, every day that you have the money borrowed from a higher interest rate, you pay more interest. Make payment of large amounts of borrowing higher interest today and next month you will pay more towards principal, and the month after you pay more towards principal.
Now, when it is time to re-finance, you do not take as big of a loan, which in most cases, reduces your loan origination fees and taxes are often charged, and you keep that small loan at a rate of interest smaller.
If your loan is half paid, and a simple interest-free loan, you have already paid 70% interest. No matter what type of loan you have, you pay 70% of it on the first half of the loan. That is how banks make money.
Yes, because when you refinance, you start paying interest first and then the principal.
It makes no sense to give a huge payment unless you, she said the principal and even if you did it this way to refinance is not always the best solution. Company always take your money and apply to the primary interest.
I think it would be wiser to refinance higher rate. Then use your large payment after refinancing. Otherwise, you throw your money away!
Pay the extra-large is best done before the refinance. Then it will all go to the principal. Once you do refinance all your expenses will be based on payment of the balance. Also, you return to the stage of most interest to pay your new loan.
While you are running on your loan, I would do as you say. Once you're in the new loan to repay it if you want or, better yet, just double your payment if the difference is quite
Posted on March 14, 2010.
