Car Payments

[randomthoughts1875]

In the past my husband and I have always purchased cars by paying in full with cash. In an attempt to build a credit score for ourselves we recently purchased a new to us car. I seem to remember hearing that if you make one extra mortgage payment a year, you can shave several years off of the mortgage. Does this apply to car loans as well? Would it positively affect our credit?

[aquariancore]

Actually yes on both accounts.

[katharina]

Quote:

Originally Posted by randomthoughts1875

I seem to remember hearing that if you make one extra mortgage payment a year, you can shave several years off of the mortgage. Does this apply to car loans as well? Would it positively affect our credit?

Things like extra payments on loans are always good for the credit score, yes. Well, only if it's not countered with late payments or anything. As far as the extra payment, the loan will be paid off sooner, but if it's just like a 3-year loan, one extra payment a year won't make a big difference. A few extra payments will show a bigger difference, though, both to get rid of the loan and to look good on a credit report.

[Calypso]

Something that I do is round up on my payments. So, for instance, if my car payment is $274/month, I pay $300/month. It doesn't make a huge difference, but every little bit helps, and by the end of the year, I've just about totaled an extra car payment.

[moonmagick]

That is a very valid point. I do the same thing Calypso. Not only do you pay it down faster, it makes for easier math in the checkbook, LOL.

[nangel78]

I put down extra on my car whenever I can. This is a good question to ask.

[randomthoughts1875]

Quote:

Originally Posted by Calypso

Something that I do is round up on my payments. So, for instance, if my car payment is $274/month, I pay $300/month. It doesn't make a huge difference, but every little bit helps, and by the end of the year, I've just about totaled an extra car payment.

This is an awesome suggestion! I really never thought about adding an extra amount to my monthly payment, much easier than adding a lump sum extra payment! You are all so helpful!

[mamab]

I would suggest making a note on the memo, or the payment coupon, that you want the extra applied to principle, NOT interest. Some places will add the extra to your interest, which doesn't change the balance at all.

[Calypso]

Quote:

Originally Posted by mamab

I would suggest making a note on the memo, or the payment coupon, that you want the extra applied to principle, NOT interest. Some places will add the extra to your interest, which doesn't change the balance at all.

That's a great idea, mamab, and one I hadn't thought of. I'll start noting on my check that I want the extra cash to go to principle. Thanks for the tip!