Does this make sense?
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Road Master
Joined: Jan 2008
Posts: 772
Likes: 4
From: ohio
Does this make sense?
Alright so with all the talk of paying off bikes, I decided to rethink my loan payment on the Sporty. I sold my car to get rid of the payments every month and am now driving a 98 chevy pickup that I already owned outright. The extra money every month will be divided up between savings and getting the sporty paid off faster.
I changed my recurring payments to twice a month (makes the bigger payment easier; half out of each paycheck). Does that make sense or should I just set the money aside and make one big payment? I thought I read on here that splitting it up actually knocks down the principal faster....
I changed my recurring payments to twice a month (makes the bigger payment easier; half out of each paycheck). Does that make sense or should I just set the money aside and make one big payment? I thought I read on here that splitting it up actually knocks down the principal faster....
Club Member
Joined: Nov 2007
Posts: 4,474
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From: Port Charlotte, Florida
not sure how it works on a bike loan but i have always been told on the home loan that if you do what you are doing it nocks it down i believe the way it works is by paying every two weeks you actually make like one or two extra payments a year because of the months that have 5 weeks and that is what is actually knocking your payment down.
Now since your paying every two weeks if you can afford throw and extra $15 or $20 bucks on every two weeks and mulitply that out for a year and you will see an even bigger difference.
Now since your paying every two weeks if you can afford throw and extra $15 or $20 bucks on every two weeks and mulitply that out for a year and you will see an even bigger difference.
Cruiser
Joined: Jan 2009
Posts: 140
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In your scenario, you're actually better off keeping the lower payment and earmarking the extra 50% as "to principal" or "payment on principal." That way, you reduce the principal much faster than by making a higher payment (that includes interest). Of course, if there's a prepayment penalty for paying your bike off faster you are better off doing what you're doing. Same way with a mortgage. If you have the same balance on a 30 year and a 15 year note, you will pay the loan off faster if you take the 30 year note, but pay the 15 year amount each month. You'll actually pay it off in something like 11 or 12 years, depending on the interest. Hope this helps.
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Road Master
Joined: Jan 2008
Posts: 772
Likes: 4
From: ohio
Ohio: thats exactly what I'm hoping for...get this one paid for and either keep it for my dad to ride or, if he doesn't want to ride by that time, trade it for a 07+ Street Glide.
I don't actually know how I can specify that the extra go specifically for the principal. Thats why I figured this would work out better cause you are reducing the amount of interest accrued from last payment...thus taking a bigger chunk out of the principal each time. Maybe I'm wrong I dunno...btw loan is through HDFSI. Wanted to go with my CU but dealer met their interest rate so that I would stay with HD. I know, I know cash is always best but for us poor folk this is as good as it gets.
I don't actually know how I can specify that the extra go specifically for the principal. Thats why I figured this would work out better cause you are reducing the amount of interest accrued from last payment...thus taking a bigger chunk out of the principal each time. Maybe I'm wrong I dunno...btw loan is through HDFSI. Wanted to go with my CU but dealer met their interest rate so that I would stay with HD. I know, I know cash is always best but for us poor folk this is as good as it gets.
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Cruiser
Joined: Jan 2009
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Call them up and ask them. They should tell you how to mark the amount above the minimum so that it pays the principal down. If they don't, call the BBB on them, because that's a bunch of BS. Either way, good luck paying off the scoot. Understand about being poor. Got laid off last summer right before I was going to get the FXDF. Glad I hadn't bought yet, but took a big haircut to get my current gig, so happy I can put food on the table for the wife and kiddos. Best of luck.
Last edited by DCamm94; Mar 12, 2010 at 01:40 AM.
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Personally I would earmark all extra money to savings until you have a good 6 months
wages or more next egg. Maybe your already there , good.
Now for the hard part leave it the F... alone , put it in a bank an hour away if ya have to.
Then divert all extra to early payoff.
Why ?? If everything goes south for ya your gonna want cash in the bank not a bike with less money owed.
When paying ahead I always wrote a check for the payment , then a separate check with
the notation " APPLY TO PRINCIPAL ONLY " for any extra I wished to pay.
Your loan contract papers should state if theres no penalty for extra principal payments , read it.
The only biweekly payment I've ever heard of has to be set up at the bank first and is on home loans.
IMHFO its not the way to go as there is a $$ fee to set it up , where by writing an extra (
apply to principal only ) check there is no penalty or set up fee and you have the flexability of not
paying ahead if moneys tight.
Bi-weekly is essentially paying an extra payment per year if on the monthly plan.
26 half payments vs 12 full.
Best to call and find out from your lender to be sure , read your contract though first.
.
wages or more next egg. Maybe your already there , good.
Now for the hard part leave it the F... alone , put it in a bank an hour away if ya have to.
Then divert all extra to early payoff.
Why ?? If everything goes south for ya your gonna want cash in the bank not a bike with less money owed.
When paying ahead I always wrote a check for the payment , then a separate check with
the notation " APPLY TO PRINCIPAL ONLY " for any extra I wished to pay.
Your loan contract papers should state if theres no penalty for extra principal payments , read it.
The only biweekly payment I've ever heard of has to be set up at the bank first and is on home loans.
IMHFO its not the way to go as there is a $$ fee to set it up , where by writing an extra (
apply to principal only ) check there is no penalty or set up fee and you have the flexability of not
paying ahead if moneys tight.
Bi-weekly is essentially paying an extra payment per year if on the monthly plan.
26 half payments vs 12 full.
Best to call and find out from your lender to be sure , read your contract though first.
.
Thread Starter
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Road Master
Joined: Jan 2008
Posts: 772
Likes: 4
From: ohio
just wanted to point out that I did not simply half my regular payment, I upped the payment and split that higher amount. no matter what, its gonna be paid off faster. Just makes paying more a little easier to swallow I guess. Thanks for all your opinions