I have heard from my bro-inlaw and others on the forum that if you make double payments and or throw a wad of cash at your bike payments that you MUST let them know that the extra monthly payment is going towards the principle on the loan and not the interest. well How do I do this?

I have been making double payments since august and I am just now aware of this.

 

If you were making payments online, there is usually a provision for that.

 

contact them and discuss it...

 

It's worth checking, but I think you will find out the additional payment went against the principal. I'd be asking some serious questions if the money went toward interest that has not yet accrued.

 

You should also ask if there is a pre-payment penalty.

 

Normally with any vehicle any extra money sent in goes towards the principle. Double check your statements. If you see its not then give them a call and let them know thats what you want to happen. Most financial institutions have no problem apply extra payments toward the principle if you let them know that.

 

I have never heard of any loan that didn't apply extra $ toward the principal. Unless, of course, you are dealing with an aggressive vig from your bookie.

 

If it is a legitimate lender, a loan amortization formula calculates how much of each payment is applied to the interest each month. That figure starts out large and gets smaller each month. So any amount over the normal payment is subtracted from the outstanding principle.

The interest amount of each payment is calculated as a percentage, sort of, of the unpaid balance. This is why you can look at a loan amortiztion and see that the part of each payment applied to principle is a larger part of each payment over the life of the loan. And why you can save even more money, and pay the loan off sooner, if you are able to increase the amount you pay as early as possible during the loan period.

Ron

 

+1 most calculate interest daily. This gives them more interest from you, which is why some states require they post both the APR, and "effective rate of interest." This can also save you big$$ by paying early. Making a weekly payment instead of a monthly payment can save you $$, BUT WATCH FOR PMT FEES!

Harley's Eaglemark and others have the ***** to charge you $6 for every payment you make online. Amazing...

 

That don't surprise me, after seeing how they gouge you on interest rates. Pathetic.

My house payment charges if If I don't get it there on-time, but all other loans and obligations allow me to pay online without fee. I can determine how much extra goes to principal, etc.

I believe the OP has a legitimate question and should call his bank to confirm how his extra money is being applied. Some sneaky things go on in some of the institutions.