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I just bought/financed a car via BoAmerica. I called them and said, I want to send you the amount of $7K (maybe more) so my monthly payment can be reduced. (I didn't give a big downpayment to the dealer) They can't. My 2 options are:
-pay you loan forward. Basically can go 7K/$655 months before I have to make another payment. At the same amount of 655 when that 7K is expended.
- apply the amount to the principal. However, all this does is reduce my # of payments. So instead of having a 5 year loan. It'll go down to 4 or 3.
I thought I was able to reduce my monthly payments for a prior car loan by making a substantial payment shortly after I bought a car. Why can't BoA let me do this?
Because the terms of the loan are already fixed. You'll have to refinance the loan using the $7K as a down payment on the new loan. If Bank of America won't refinance it you should have no problem finding another lender who will.
Depends on the terms of the loan....did you read the fine print at the time you took it?? It's probably in there but don't feel bad - most people never read through all the legal mumbo jumbo and don't even think about it until trying to do something like you're doing.
It's become very common with lenders to do this. And the answer to "why?" should be obvious - they still get to make money off the loan via interest based off the original amount taken.....if they recalculated it then it would lower their profit taking from you that was based on the higher loan and the higher amount they can skim off the top....big surprise right?
Depends on the terms of the loan....did you read the fine print at the time you took it?? It's probably in there but don't feel bad - most people never read through all the legal mumbo jumbo and don't even think about it until trying to do something like you're doing.
It's become very common with lenders to do this. And the answer to "why?" should be obvious - they still get to make money off the loan via interest based off the original amount taken.....if they recalculated it then it would lower their profit taking from you and the higher amount the can skim off the top....big surprise right?
If you had the payment applied to princ they would not be getting interest on the original amount taken. That’s not how it works
I wanted to do this with my mortgage. I had a loan through Wells Fargo with PMI. We did very little work to the house and it came up in value, enough to drop the PMI. I also wanted to add a little cash to get the monthly payment even lower.. they wouldn't do it. So I did a no cost refi with some random lender at 3.5%, got exactly what I wanted, and Wells Fargo ended up buying back the loan anyway. I imagine the whole process cost them more than a few thousand $ vs just working with me.
If you had the payment applied to princ they would not be getting interest on the original amount taken. That’s not how it works
Right if applied towards principal....but if using the pay it forward option then they would still get their cut. Also some (but probably not BoA as a lender) may have a prepayment penalty.....this is why people need to read through all the stipulations when taking a loan instead of getting a surprise later on.
I hate the refi process because of the dings on your credit score.
I didn't give the dealer a large downpayment because someone (my dad/uncle?) advised me against it. Things change. I remember I was able to do this last time.
I hate the refi process because of the dings on your credit score.
I didn't give the dealer a large downpayment because someone (my dad/uncle?) advised me against it. Things change. I remember I was able to do this last time.
Thanks for the advice!
so what has changed that you no longer trust your dad/uncle's advice?
Location: Was Midvalley Oregon; Now Eastside Seattle area
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No. You have an installment loan. The finance (interest) is "financed" into the loan. Meaning, if you have a 5 year loan, the interest on the amount borrowed is added to the principal. The monthly payments is then derived by deviding that sum by the number of months of the loan.
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