Paying off a car quicker

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fdaniels

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Hey all. So I decided to put my spare cash into my car to pay it off sooner. How do I go about doing this? Do I simply pay in more money, or will they just put that money aside and mark it as future payments. Will these extra payments automatically reduce my loan amount? The amount that I extra payments will vary (I expect to put in more in towards June, then even more starting 2012).

I worked out that it will be possible to pay off the cage in 18 months if I commit to these extra payments.
 
Save up the money in a separate account & make a bulk payment on your car every couple of months. Speak to your bank & ask them to recalculate your instalment amount - if you don't do this, it'll just be handled as payment against future instalments.
 
Its going to be difficult to continue making variable monthly payments towards your vehicle. You will need to constantly liaise with the bank and let them know of any additonal payments and they will need to re-work your interest payments and then your outstanding debt. I suggest just try and save a bigger lump sum payment ( find a good short term investment )... Then just phone the bank and ask them for a settlement figure. It will be much less than the amount owing , depending on term of agreement,interest rates, and total amount outstanding.
 
Deposit extra payments into the vehicle finance account. This will be seen as "Advance Payments" and will continue to accumalate with interest. Once you have a sizable amount of cash in "Advance", call
the bank and ask them to recapitalize your loan. When this is done, you can choose to either lower your monthly installment or decrease the loan term.
 
Viper25 said:
Deposit extra payments into the vehicle finance account. This will be seen as "Advance Payments" and will continue to accumalate with interest. Once you have a sizable amount of cash in "Advance", call
the bank and ask them to recapitalize your loan. When this is done, you can choose to either lower your monthly installment or decrease the loan term.
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What interest does one get on advance payment ?
 
SinghDude said:
What interest does one get on advance payment ?
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The interest rebate is calculated at the same rate as your contract. It is only calculated on the amount you pay in advance and not on the advance amount inclusive of the rebate interest.
Well thats how wesbank works, I'm sure the other banks offer something similiar.
 
Just call the bank and ask them to increase your installment by say R1000. They will recalculate everything.
Did this awhile back.
 
Viper25 said:
The interest rebate is calculated at the same rate as your contract. It is only calculated on the amount you pay in advance and not on the advance amount inclusive of the rebate interest.
Well thats how wesbank works, I'm sure the other banks offer something similiar.
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How much interest does one get when paying money in an advance account...

Don't confuse debit interest vs credit interest
 
SinghDude said:
How much interest does one get when paying money in an advance account...

Don't confuse debit interest vs credit interest
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I am not confusing debit interest and credit interest. I am not 12 years old.
I already answered your question.
 
Is it really worth paying additional amounts on a vehicle loan?

Since it is a depreciating asset, and if I had various different debts (home loan, credit card, etc) would it indeed be correct to say that paying additional amounts on a vehicle loan would be the last of my priorities ?
 
Simple dude:

Will you earn more money investing your "stash" than you will if you clear your debt? I.e. are your investments earning more than your loan interest is costing? If not, then pay it off.

How to:

1) With the new credit act, you should be getting a settlement estimate every month. If not, phone and ask for one.

2) Go to the bank and make a direct payment with the settlement amount of that day (it changes every few days). The bank will issue you with the Vehicle finance account, where you use your acc. number as reference.

3) Bank takes 1-2weeks to send you transfer of ownership papers.

4) IMPORTANT: within 21 days, get it to the traffic dept and put the car in your name. Since it's still in the bank's.

5) Hooray \o/

This is the procedure i followed last month. No mess, no fuss...no penalties.
 
blunomore said:
Is it really worth paying additional amounts on a vehicle loan?

Since it is a depreciating asset, and if I had various different debts (home loan, credit card, etc) would it indeed be correct to say that paying additional amounts on a vehicle loan would be the last of my priorities ?
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Simple - pay the one with the highest interest rate off first - which would probably be your credit card then car then home.
 
Thanks for the advice guys.

I just got off the phone with the bank now. I asked them to increase my payments. It was pretty painless to do. They said that the extra amount WILL reduce the capital amount :D I will just phone them every few months as I am able to commit to larger sums.
 
blunomore said:
Is it really worth paying additional amounts on a vehicle loan?

Since it is a depreciating asset, and if I had various different debts (home loan, credit card, etc) would it indeed be correct to say that paying additional amounts on a vehicle loan would be the last of my priorities ?
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No bluno it is still money you owe, regardless of the item you still owe x-amount, the more you put in the faster you pay it off. You could take the car money and put that into the bond.

Rapid if you can afford to put extra money into your car i highly doubt you have credit card debt or that would just be silly with the crazy interest rate on the CC.
 
killadoob said:
No bluno it is still money you owe, regardless of the item you still owe x-amount, the more you put in the faster you pay it off. You could take the car money and put that into the bond.

Rapid if you can afford to put extra money into your car i highly doubt you have credit card debt or that would just be silly with the crazy interest rate on the CC.
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I was referring to her question - but out of interest, my credit card is exactly the same as my car loan ;)

Oh - and you'll notice, I said CC first, then car - because the credit card interest is higher.

Also, if you put the car money into the bond, and the car loan interest is higher, you're not very bright.
 
xrapidx said:
I was referring to her question - but out of interest, my credit card is exactly the same as my car loan ;)

Oh - and you'll notice, I said CC first, then car - because the credit card interest is higher.

Also, if you put the car money into the bond, and the car loan interest is higher, you're not very bright.
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No you put the extra into the car, pay it off and then put the entire amount you used to pay plus the extra money from your car payment into your bond. The faster you pay off the car the faster you can pay off your bond.
 
killadoob said:
No you put the extra into the car, pay it off and then put the entire amount you used to pay plus the extra money from your car payment into your bond. The faster you pay off the car the faster you can pay off your bond.
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Thats what I said? You pay off the higher interest items first.
 
fdaniels said:
I just got off the phone with the bank now. I asked them to increase my payments. It was pretty painless to do. They said that the extra amount WILL reduce the capital amount :D I will just phone them every few months as I am able to commit to larger sums.
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Yes, it always will reduce the capital amount. Thankfully the days of the hire purchase rip-off on vehicles are long gone. Who is the loan from? With Wesbank I simply transferred extra money whenever it was available.
 
I would do the following:-
1. Take the money out of the bond and pay of the CC first. Continue paying off the bond with the CC payment added to the bond repayment.
2. Once this is done, take the money out of the Bond and pay the car off (ask bank for settlement Value). Using the money for the CC, Car and bond repayment you can eliminate the bond very quickly.
Use excel to calculate the repayment amounts over the period and dont make the mistake of paying off the CC and car interest over the 20 / 30 years remaining on the bond.
 
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