Pleasant surprise
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Outstanding HDF Member
Joined: Dec 2007
Posts: 2,215
Likes: 2
From: Northern Arizona
Pleasant surprise
I don't regularly check my bank statements, as I should, and today decided to do a quick glance and noticed a direct pay to something from my checking account going back to September of last year. I pay my motorcycle from my savings account, so I got a little worried, especially when I couldn't figure out where the money was going. Called the bank, who started investigating for me, and then found my bike loan statement. Turns out I've been making 2 payments per month for the past 9 months. Bike will be paid off sooner now. Too bad I found my mistake...
Seasoned HDF Member
Joined: Apr 2008
Posts: 23,053
Likes: 12,327
From: Arkansas
I'm confused. I thought when you financed a bike or car the loan repayment amount was set and regardless of how much you pay per month you end up repaying whatever is in the contract. I know when I pay additional on my bike, the next months statement shows a lower amount due to offset the additional I paid the previous month. I think if you call and get a payoff amount it will equal whatever the total you borrowed less what you have paid and won't end up being any different than the total that was in the original loan agreement. You can pay it off sooner but I don't think you are saving any money.
Please correct me if I'm wrong. My bank account will attest to the fact that I know very little about finances.
Please correct me if I'm wrong. My bank account will attest to the fact that I know very little about finances.
Banned
Joined: Jan 2006
Posts: 17,265
Likes: 21
From: Los Angeles, CA
I thought the interest included in the loan amount is based upon a certain amount of months as in 48, 60, whatever. Of course I have never financed a vehicle. I just wait till I have the cash and buy it. Works out better for me this way.
Extreme HDF Member
Joined: Jun 2007
Posts: 12,653
Likes: 18
From: Broken Arrow, Oklahoma
I'm confused. I thought when you financed a bike or car the loan repayment amount was set and regardless of how much you pay per month you end up repaying whatever is in the contract. I know when I pay additional on my bike, the next months statement shows a lower amount due to offset the additional I paid the previous month. I think if you call and get a payoff amount it will equal whatever the total you borrowed less what you have paid and won't end up being any different than the total that was in the original loan agreement. You can pay it off sooner but I don't think you are saving any money.
Please correct me if I'm wrong. My bank account will attest to the fact that I know very little about finances.
Please correct me if I'm wrong. My bank account will attest to the fact that I know very little about finances.
Your amount due is lower because they don't want you to pay it off sooner. They lose thousands of dollars in interest that way. That's why some places charge you a penalty for early payoff.
Here's a way you can confirm it. Call this month and find out what your payoff is. Then call them next month and do the same. Even though you continue to make your payment, your payoff next month will be higher than this month. You can even see a slight difference just doing that just before, and just after the due date of the monthly payment.
After you've 3/4 of the way or more in your loan, only then will your payoff start being less each month. Until then, the majority of your payments are going toward the interest, not the principle.
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Elite HDF Member
Joined: Apr 2006
Posts: 3,948
Likes: 54
From: The Burgh
Your amount due is lower because they don't want you to pay it off sooner. They lose thousands of dollars in interest that way. That's why some places charge you a penalty for early payoff.
Here's a way you can confirm it. Call this month and find out what your payoff is. Then call them next month and do the same. Even though you continue to make your payment, your payoff next month will be higher than this month. You can even see a slight difference just doing that just before, and just after the due date of the monthly payment.
After you've 3/4 of the way or more in your loan, only then will your payoff start being less each month. Until then, the majority of your payments are going toward the interest, not the principle.
Here's a way you can confirm it. Call this month and find out what your payoff is. Then call them next month and do the same. Even though you continue to make your payment, your payoff next month will be higher than this month. You can even see a slight difference just doing that just before, and just after the due date of the monthly payment.
After you've 3/4 of the way or more in your loan, only then will your payoff start being less each month. Until then, the majority of your payments are going toward the interest, not the principle.
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Elite HDF Member
Joined: Apr 2006
Posts: 3,948
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From: The Burgh
I was told that an easy way to get a better deal when you pay cash is to finance the bike, which will push the dealer to give you a higher discount on the bike cause he's commissioned by the lending institution. Once you get the papers for your loan, pay it off. You should have only a few bucks of interest to pay. This works only if there's no penalty for early pay-off, which I think, it's pretty much the norm nowadays.