Capital Payment - Principle or Residual? Does it make a difference?

[Dolby]

I haven't really worked this out financially - but hoping someone may know offhand or has done it.

Assume a car that the balance is R300,000 and a R100,000 residual ontop of that - so R400,000.00. If you had a spare R100,000 that you wanted to dump into it, is it better into the capital (making R200,000/R100,000) or residual (R300,000 with no residual)?

Do you even have an option?

 

[JStrike]

It doesn't work like that.

You owe X.
This is broken down into Y payments of value Z, but where the final payment is a larger amount Z1 (The residual payment or balloon payment). Y, Z and Z1 is your payment plan.

You can pay off (or part thereof) of X. This will effect Y.

If you would like to, and the company is willing to do it, you can restructure your payment plan (the values of Y, Z and Z1).

The best option (interest wise), is to not restructure your payment plan (Only Y gets effected, and you end up paying less interest)

 

[pinball wizard]

Put the R100k into your bond.

 

[JStrike]

Put the R100k into your bond.

His homeloan? That will invariably have a lower interest rate. Paying off part of the loan for his vehicle would be the better option

 

[Y'all Qaeda]

Put the R100k into your bond.

This and then keep it for when the residual hits you...

 

[pinball wizard]

His homeloan? That will invariably have a lower interest rate. Paying off part of the loan for his vehicle would be the better option

No.
https://oostcomeyerdewaal.wordpress.com/2014/07/15/paying-off-your-bond-faster/ It thus appears that it is wise to pay back your loan in as short a period as possible Read to the bottom, he shows the calculation with a car as well.