Any money you pay over a standard payment automatically comes off the back end of the loan (the priciple that is), automatically lowering the principle from that point on. IE: If you pay $100 on payment number 12 on a 72 month loan, that's 62 months you won't be paying interest on the $100 worth of priciple. This also results in increasing the principle you'll be paying each and every month (to a small degree) since you're no longer paying interest on tha $100. I've paid off a couple of vehicles faster doing this. We also have been doing this on our home. Our 15 year loan will be paid off over 2 years early. Paying extra can save you a ****load of cash over time....

 

I financed most of my first HD and some of my second one through HD. I sent a check for more than twice the payment each month and didn't specify additional principal payment. All extra money was always applied to the principal as long as I continued to make a monthyly payment. If I would've failed to make a monthly payment, the extra money from the past would've been used to cover that payment. The statement would always show my next payment wasn't due for months. I know they were hoping I would quit paying until the due date so they could get more interest in the long run, but I kept paying every month.

This gives you the option to keep paying ahead and save interest in the long run, or if you fall on hard times and can't make a payment, you won't be penalized for a late payment the month or whatever that you don't pay. You will eat up your extra payments if you stop paying, but if you specify principal only, you have to make next months payment to prevent from being penalized.

U.S. Bank does this the same way with their auto loans. It's actually the best of both worlds. HD was one of the first financing companies to come up with this. Many people who finance HD's are tradesman that may not work year round. Many think it would be easy to make a double payment when they are working, but don't know how they would make a single payment when they are not. It allows them to make double payments when they can and no payment when they can't. As long as they pay at least 6 months a year, they will not get in credit problems or loose their bike. HD credit was great for me. Intersest rates were very competive, great service. Titles to both bikes were in my hand within two weeks of mailing payoff.

I have never heard of the rule of 78, but from now on I will be more careful if I finance anything.

Dennis

 

I'm not trying to be a smart *** here (well, maybe a little), but would you ask your loan officer how to work on your Harley?

Then why are you taking banking advice from a bunch of Harley owners? Loans are different, and laws differ from state to state. Your best bet would be to call the lending company and ask them directly.

 

You are correct,however they are right about Eagle Mark and Harley Davidson Credit Corp.
I called Harley Credit yesterday about the extra payments and they do go towards the principal.
Now on my wifes Camaro loan thru Ally(GMAC),the extra does not unless you notify them.

 

I would bet a steak dinner that there are more accountants and loan officers on this forum than Harley mechanics. lol

Pretty good advice. It is pretty uncommon now-a-days for a loan to not automatically pay down principal on over-payments. But, there are loans that have pre-pay penalties or issue a credit for over-payments rather than pay down principal. I ask these questions before signing the loan though and if they will not allow me to pay it off early, or pay down principal in advance... I won't do business with them. Plenty of lendes out there that are not scum buckets.

 

When I was in Iraq, I called Chrysler Financial to get the pay off amount on my pick up. When I went to pay online within a matter of minutes, the payoff amount changed. I can only chalk that up to time difference, it was something like a $50 difference.

I over paid by about $1.00. I came home from Iraq to find a check from Chrysler Finanacial for about $13.87, I was not penalized for paying off early however.

 

Look at your statement.... it should reflect how much you have left to pay (pay out)
I tossed a few grand when ever I could, and paid off the bike in just over 3 years

 

Certainly calling the company who holds title is the best advice, but what has been stated here on this thread is certainly not rocket science nor wall street financing and is somethime many have done. As a matter of fact it''s a point of law, extra paid money automatically goes to principle unless otherwise designated by the payee...

 

Just wanted to be the first to ask, why are you financing toys? If you can't afford to pay cash then you shouldn't get it to start with.


j/k


Now on to my deal with Eagle

Bought new FLHTK on 11/11/10

Made double payments on 11/20, 12/10, and 01/10/11. My next payment due date is 5/11/11

This is the note on my account which makes me want to question the words "may & possibly" Think I'll call them today

Your account is paid ahead. Current Amount Due at this time is $0.00, but
please note that interest continues to accrue throughout the term of the loan.
You may pay the Monthly Payment Amount or another amount which may
effectively reduce the length of your loan and possibly reduce the unpaid
principal amount of your loan.

 

What BDP said^^^. Pay cash. No interest. The rule of 78's? Hell the only rule of 78 I obeyed was how fast I could get to 78 after I left the dealership. On the bike I owned outright. Save your money and pay cash. After interest payments are added in...how much did you pay? Just sayin'.............it ain't difficult. It requires discipline. Took me 7 years. If I can do it....so can you......interest payments on a scoot is nothing more than punishment. Self-inflicted punishment. Imagine what you could do with that money you pay in interest....groceries, beer, take the OL out for a nice dinner....buy baubles, bangles, and beads for the scooter....cams, etc.