Lower Monthly Car Payments (pay, payoff, companies, year)

[eliptik]

I understand that if you pay above the minimum on your monthly car payment the next month's payment will be a little lower, but will it constantly stay that way? When I first purchased my car I was initially paying $370/month on a 5 year loan. I payed about $30 extra each month after and now my payments are $275/month. Now what if I just pay the minimum of $275 onwards, will my future payments stay at $275 or will it jump back to my regular payment of $370?

[renter07]

Originally Posted by eliptik

I understand that if you pay above the minimum on your monthly car payment the next month's payment will be a little lower, but will it constantly stay that way? When I first purchased my car I was initially paying $370/month on a 5 year loan. I payed about $30 extra each month after and now my payments are $275/month. Now what if I just pay the minimum of $275 onwards, will my future payments stay at $275 or will it jump back to my regular payment of $370?

That's interesting. Usually, if you pay extra on principal, it should not affect the initial monthly payment calculated on a fixed rate. It just generally means you payoff the loan earlier than the original terms.

But, in your case, if the minimum payment is now $275, it should stay that way until you finish paying it off.

[mojo_1979]

Originally Posted by eliptik

I understand that if you pay above the minimum on your monthly car payment the next month's payment will be a little lower, but will it constantly stay that way? When I first purchased my car I was initially paying $370/month on a 5 year loan. I payed about $30 extra each month after and now my payments are $275/month. Now what if I just pay the minimum of $275 onwards, will my future payments stay at $275 or will it jump back to my regular payment of $370?

No that isn't how it works. Anything that you pay that is above the minimum payment goes toward your next month's payment, thus reducing your next month's minimum payment.

For example, if you had a $400 per month car payment but paid $450 on your first month, then your next bill would have a minimum payment of $350. However, if you only pay the minimum of $350, your next bill will now be back at $400.

[bentlebee]

Originally Posted by mojo_1979

No that isn't how it works. Anything that you pay that is above the minimum payment goes toward your next month's payment, thus reducing your next month's minimum payment.

For example, if you had a $400 per month car payment but paid $450 on your first month, then your next bill would have a minimum payment of $350. However, if you only pay the minimum of $350, your next bill will now be back at $400.

So that is how these companies make sure you really pay double for that car!