I bought a pre owned car a couple months ago. Loan is $22,349. 12.6% interest. Before I made the first payment I asked an agent from the bank a few questions.
Me: "If I make a payment that is more than my regular payment will the extra amount go towards principal."
Agent: "Yes its a fixed interest rate. Any extra or additional payments will go to the principal."
Me: "Ok so if my payment is $444 and I pay $500 then $56 goes to principal?"
Agent: "That is correct."
Pretty straightforward.
Regular payment is $444.65. I made a $500 payment on October 15th. $272.81 went to principal and $227.19 went to interest. I made another $500 payment last week. $148.39 went to principal and $351.61 went to interest. Loan is down to $22,051.80
I emailed the bank asking to them to explain this to me since I was confused. This was there response.
"To make a principle only payment you will need to add the amount that you wish to go to the principle to your monthly payment. If the payment is sent separately for principle only and is not received on the same day that the payment is made, interest will be taken from the payment and the remaining would then go to the principle. When the principle only is added to the payment all the funds intended for principle are then processed to the loan balance. The loan is a simple interest loan, which means that the interest is accrued on a daily basis. If you have further questions please call into the contact center at...."
Look, I'm not very smart. I'm not saying the bank is being deceptive but I'm very confused about their explanation. I know I'm simply not understanding something. So I welcome any ELI5 comments.
Thank you.
Submitted December 02, 2020 at 09:25PM by fightmethenbro https://ift.tt/3ois8xX
