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Extra Payment on Car Loans


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Does anybody know if when you make an extra payment on a car that they must apply it to the principle?

I pay my note online, but if I send a check for the extra payment and put principle only, they must apply it to the principle? We pay a high interest rate right now. Thanks Lindsay

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You'll have to check your loan papers and what it says about overpayment.

I got my car loan through Crap 1. I didn't get a payment book - I just get a monthly bill.

I know when I pay a little extra (to round up to next $10 increment or so), they just send the next bill with a lower monthly payment. I just figure that as long as I keep paying extra over the payment I agreed to, then I'll pay off my loan a few months early. Or I always have the safeguard that if I'm that much ahead and run into some problem in a month that an unexpected cost comes up, I can just pay the smaller amount the statement says I have to.

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I've been told that to be sure that the extra money you're paying goes fully toward the principal, rather than interest, you should send it separately and write on the front and back of the check "To be applied to principal only.". This in essence becomes a restrictive endorsement and by depositing the check, the lienholder is agreeing to reduce the amount you owe, and that interest is calculated on, by the amount of your payment.

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