Maxxxed

iTrader: (3)

I financed through Nissan Motor Acceptance Corporation (NMAC) and have a big loan with them. Recently, I saved up some money like $4K. Instead of wasting it on things I don't need, I was thinking maybe I should put it towards my loan.

Has anyone ever done this? Does it make any difference, I mean when I send them a $4000 check instead of a regular $399 monthly payment check, will that money be put towards the principal of the loan or will it be used to pay the interest? I guess what I am asking is, is it worth it to overpay a monthly payment to work to my benefit?

SEmy2K2go

iTrader: (10)

Depends on if your loan is a simple interest loan. Might want to consult your paperwork from when you closed on your car or call them for confirmation. I wouldn't just write out a $4k check to them without talking to them prior.

Maxxxed

iTrader: (3)

I just looked at the loan document, on top it says "Simple Interest Retail Installment Contract - New York" so I guess this is a simple interest loan. Is that a good thing for my purpose?

SEmy2K2go

iTrader: (10)

If your intention is to pay down some of the loan/interest...then yes...this will all go towards the principal eliminating tons of interest over the life of your loan. You may still want to touch base with them before hand. Question - how did you manage to keep from using this for mods? Wish I had your discipline...lol.

Maxxxed

iTrader: (3)

I don't have required discipline, that's why I want to put it towards something that's more of a priority. I have a lot of debt, like this car loan and student loan so I have to think like a boring old man to get out of debt. It sux because I am only 23.

I don't know about you guys but knowing that I owe over $20K on my car kind of discourages me to have fun... that's why I want to pay it down as quickly as possible so I can live a stress free life.

Oh, trust me I caught the "mod bug" too. Right now, I am also saving money for some JIC suspension.

itdood

I didn't know NMAC (or anyone else for that matter) did simple interest car loans. It has to be front loaded which means when you first start paying off the loan, most of the payment goes towards interest, not principle. By the final year, most of the payment goes towards principle.

Paying down the principle all depends on what rate you got. I got 2.9%, I would never pay down principle on that. The lower the interest rate, the less it makes sense to pay down principle. If the loan were like 8% or above, I would try to get it paid off ASAP. At 2.9%, I'm letting that ride and investing my money. I could have paid cash for my 2k3. I didn't even put a penny down on the the thing because of the low rate and my payment is $516. I have the money in CDs and mutual funds that earn more then 2.9% so it didn't make any sense to pull any of that money out. The way stocks and investment interest rates are going today, it REALLY doesn't make sense to pay down low interest loans.

My advice to you is, it's time to learn some dicipline and invest the money. You're going to have to eventually, might as well start now.

If you decide to pay down principle, just cut the check and mark the extra principle on the slip.

You think your debt is bad now, wait until you buy a house!!!

Anyways, a student loan and a low interest car loan is not bad debt, so don't sweat it. If you EVER incur finance charges on a credit card, then you are messing with bad debt. I use a credit card for just about everything, but I convenience charge and never carry a balance. I've never once paid interest to a credit card company. That's the kind of dicipline you need to shoot for.

SkoorbMax

Listen to itdood. He has an unusual understanding of money, and I say that because most adults don't have the first clue. They go through life totally devoid of the basics of financial responsibility. It's sad really, but don't buy mods when you're 23 with a $20k car loan and student debt.

jrklar

iTrader: (1)

I'm in 100% agreement with itdood. I am 24 and have car and student loans, similar to you. I've paid off a good chunk of my car loan in the past 2.5 years just paying the monthly payment. I have the cash to pay it off entirely right now, but the interest rate on my car loan is just 3.9%. While I am not currently investing that money in the market, I feel much more secure just knowing I have that cash sitting in the bank should I need it in an emergency.

PoLo

iTrader: (7)

got a question for you guys.....
noticed that you said that i should mark down the extra money on the check. i remember asking my mother about this and she said the same.
BUT, my problem is that i make my payments through chase online banking. my monthly is $379, but i normally give anywhere from 4-500. now, it's only $20-$100 extra per month, but the way it seems, that money is going straight to interest. NOW, if that's the case, and i have paid my 5 years worth of interest, and then pay off the car, if i pay it off in let's say 4 years, does this mean that i am owed a refund at the end. i figure that i paid 5 years worth of interest, and when i make my last payment, they see that i've finished ahead, and then issue me a refund. or does it not work like that. i never specify when i give extra, i just give what i give, which varies from month to month. enlighten me guys. thanx.

BiggD23

I don't want to make anyone nervous here...but I recently went through this whole thing with NMAC and it was a mess. First I should say that my loan is directly from NMAC and my payment stub arrives in an NMAC envelope every month, so this probably won't apply to you if yours isn't the same.

Anyway, I have 1.9% interest and my payments are around $500/month but for the first few months I was sending $600-$800 each month just to try to get ahead. However I soon noticed that my payment amounts were off and it didn't seem like the right amount had been deducted from my principle so I called them. It turns out that any additional money sent with the normal payment is put towards future monthly payments with interest. Needless to say this in not what I intended that money to go towards...I mean what is the point of paying ahead if you're still paying the interest? What NMAC expects you to know...and it isn't written anywhere on the statement...is that you have to write a completely seperate check and mail it to a seperate address each time you want to pay ahead. So now I have to mail my normal $500 monthly payment to Pennsylvania and any amount that I want to pay ahead must be sent seperately to Dallas.

Makes alot of sense huh???

F23A4

It was my understanding that banks didnt accept principal curtailments on non-mortgage loans. Rather, additional funds go into a suspense acct attached to the loan until a full payment(s) can be made.

Please correct me if I'm wrong on this....

Quicksilver

iTrader: (1)

I think that you are correct. It's a set dollar amount for the life of the loan, and whether you pay $20,000 off in 3 years or 5 years, you still pay the same amount of money overall with NMAC.

PWRLFT

BiggD23 is right, if Maxxed writes a $4000 dollar check, the next statement will read no payments untill 2005.

NMAC wants to keep all the interest it thinks it's going to get from you. This is not uncommon, Toyota does the same thing. NMAC just wants to make it hard for you to get out of paying the interest.

The only way to do it, if you really want to pay down your loan faster is to write a seperate check to a different place, call first to confirm the address and everything.

After you do that make sure you request an amerization chart of your past payments. This is important because you need to check to see if they really did put the money toward principle.

Let us know how it goes, I want to do something similar, I like paying round numbers so I want to send NMAC a small principle check every month. I love BillPay.

PoLo

iTrader: (7)

well i just called up chase (the loan was through the dealer, which is contracted with chase) so i dont' know how different it. i asked them about the "extra" money sent each month. as they explained it to me, my interest is $2.30 per day, and when i give my monthly, all i'm paying for is the interest accrued UP TO THAT POINT. anything extra i give is automatically paid to the principal. so in no point am i giving more or giving interest ahead of schedule.

but wait, as i typed this, i just realized something. where do they come up with this "daily interest amount"...is that calculated based on my initial loan amount or whatever is left in the principal. if that's the case, then yes, i am giving more if i have already paid ahead. essentially, my interest paid should always be fluxuating. you know what, i just confused myself. that hurts...i'm gonna go hide.

Garfield

I am also using NMAC and in the monthly bill, it said...

"Your account can be paid in full on or before January 06, 2004 for $****.**"

so if you pay half of the amount above, your payment should go down.

SkoorbMax

I didn't know that about NMAC. That is CRAP. I had assumed that my car loan was not done in this manner (I am going through a local bank). I figure that my $16k note will cost me about $19k if I pay over the entire 60 months. However, if I pay off immediately after getting the loan I should be able to give them $16k and be done with it, but you guys are saying that they essentially figure the interest at the start, putting your total loan up to $19k, and dividing that evenly between 60? If that is the case, obviously paying it off early is a waste of time, since you'd do better to just invest any extra money you have, since you'll be paying their interest either way.

skandalouz

iTrader: (2)

interesting... i've always assumed that if u pay more principal, your interest payments will also go down... i guess i will have to reevaulate prepaying my car loan...

downby3

Call them and get the address to mail the check to. Do not mail the check with a payment! Apply the payment towards principal amount. They have a separate loan department that you have to mail your extra payments to. If you mail it with your payment, it will go towards intrest first.

BiggD23

Exactly. It's not that you can't pay ahead or that they force you to pay the interest either way, it's just that they make it as hard as possible to pay ahead as they can. Not only is paying ahead not mentioned at all on my statement, it was like pulling teeth getting the correct address to send extra payments to from them on the phone. One guy said he didn't think there was a way to do that, another told me this, another told me that, etc. Finally I got someone who knew what she was doing and she gave me the correct address in Dallas.

And here's the kicker...the extra payments don't show up on your statement until the end of the year...you have to call to get the correct balance. For example say I owe $20,500 and I make my normal $500 monthly payment plus I send an extra $1000 to Dallas. Next month when I receive my statement it will show $20,000 as the remaining balance owed, not $19,000.

CCS2k1Max

iTrader: (2)

After reading some horror stories about NMAC messing people's credit history for NMAC's mistakes, all I can say is refy, refy, refy!!! I got a simple interest loan from a local CU and I'm quite happy. (BTW, my original NMAC loan allowed for pre payment).

PoLo

iTrader: (7)

actually, does it matter that you pay interest first....when you're done paying, you get a nice refund check for overpaying . i'd rather receive that. kinda like overpaying taxes, knwoing that you'll get a nice refund at the end. am i right or am i right.

CCS2k1Max

iTrader: (2)

Hmm? Nothing for something... If you're that generous, I need an interest free loan.

IceY2K1

iTrader: (3)

Why? Why in the HELL would you want someone else to get to USE/hold YOUR money for you...FOR NOTHING?!?!?

You should NEVER let someone else ESPECIALLY Uncle Sam hold your money for a YEAR...just to get YOUR money back.

I'd rather pay LESS and then OWE at the end.

IceY2K1

iTrader: (3)

As for NMAC...I also got a 3.9% loan, however I stupidly put down $10K. I was just trying to keep my payments low, so I had "breathing-room" each month, ie personally it's a lot less stressful knowing I only have to pay $318 vs. $500+ per month. Now I realize I should have put the $10K into some interest baring account instead and just pulled money from there when needed. Oh well...live and learn plus it's kind of nice NOT being upside-down for once, so IF I need to sell/trade, I can without still paying for a car I don't even own anymore.

There are advantages/disadvantages to each, but for 3.9% or less, I don't think paying off the loan early is the best choice. Rather put it into a "safe" interest account for emergency use. Of course, this is assuming you don't have any *HIGHER* interest loans you could paydown/payoff.

PoLo

iTrader: (7)

maybe i am weird, or maybe i'm not. i dunno...i've done this for as long as i can remember. mother's an accountant, and she keeps track of all of my finances. for some people, yeah you can get worried, especially if you think you're not getting back as much as you deserve, but this being her job, she keeps an eye out for me. and she always taught me to have some extra deductions taken out, so you don't get screwed at the end. on average, i have roughly $50-75 taken out every paystub, and then when my taxes get done, those deductions add up to whatever i owed, if anything, and the rest gets refunded. and if i never owed, then that's just one big refund i'm gonna get.

it also depends on the kinda person you are. if you're good with money, then there is no need to worry. i'd rather think i'm low on money and then get a nice hefty check at the end. my taxes this year, i expect a big paycheck, and rather than having spent that money little by little, i could either invest it, or if i wanted rims, i can plop it on those. point is, rather than spend a little and then try to save up, spend as you want, and then get a check after all is said and done.

but again, depends on who's comfortable with that. i have my mother watching over my money, so i don't think twice. obviously some of you don't seem comfortable with this notion. but i'm certainly not CRAZY. i know quite a number of people (a lot actually) who use this method and enjoy it.

IceY2K1

iTrader: (3)

Oh...didn't MEAN to sound like you were "weird" or something. I know MANY others that do that, but I just don't understand the logic.

To me, if I was *THAT* concerned about managing my money, so I could afford to pay ~$500 at the end of the year...I'd have automatic deposit take $25 from each paycheck($50/month) and put it into my savings/overdraft account. That's the SAME thing you're doing, except you can actually touch the money IF you need it plus you get a measly 1% or whatever interest. I understand that some people can't handle the temptation, but if I don't have AT LEAST $1K in my savings for "emergencies", I get nervous.

trey

I also have a loan through NMAC and now i understand how they work thanks guys. I would occasinally send 100 or so more but not no more.

If my payment is 500 and i pay 600 then my next payment would be 400. They sure do make it hard to pay it off.

NYC2SD

I work in the auto finance sector. The additional payment is applied to principle. True they don't want you to pay your loan off early so they let you pay less the next few months. Those future payments would be applied to the 30 days or so of intrest in between each payment. HOWEVER, the payment is applied like any other simple interest auto loan. Keep paying your normal payment, and your loan WILL be paid off more quickly.

True, I would put the money towards a high interest lines of credit first. Your maxima is a secured loan, back by a hard assets, with a low rate. How about your high rate credit cards that have no asset to back them.

gtbigup

Go to nmac website it will tell you about making extra payments, and marking it for pinciple only on your check.

Zero Deuce SE

Why is the payment due different from my regular payment amount?

If you have paid more than your regular monthly payment, any funds remaining after the interest and principal is satisfied is applied toward your unpaid principal balance. You may also gain the benefit of this additional amount reducing the amount of your next monthly payment. If your payment is less than the regular monthly payment the difference due will be added to your next monthly payment.


Can I pay more than the monthly payment amount?

Yes. If you would like to make a principal payment to your loan balance please note the following procedures. In doing this you will help us to ensure that we correctly apply your payment. Once we have processed the payment it will appear on the next available statement as a principal payment:


Please make out a separate check for the amount you want to apply to your principal balance.
Please note in the “Memo” or “For” line of your check the account number and the words “principal only payment”.
Place check in an envelope and mail to the following address:
Nissan Motor Acceptance Corporation
PO Box 660577
Attn: Transaction Processing
Dallas, TX 75266

Skier

iTrader: (1)

Hi guy's,
My 2 cents. I worked my dealer down from sticker 28,275 to 23,000. I bought in Dec (when word got out about the 04) and I went to the local dealer with the most invemtory. Yes, I had to work them for 4 weeks (8-10 visits) but my best argument was the fact that salespeolple were twiddling their thumbs while sitting on the inventory. I also put a big downpayment on the car only because I could do so without leaving myself "insecure" savings wise. My payments are "very low" and I eliminated depreciation before I even ended my negotiations or anounced my cash down or trade. My trade brought the car price down to 21,500. Not bad for an SE with all but the leather that I hate to stick to in the heat.
Paying down your car would be a mistake. Once you are locked into the loan NMAC will make it difficult to benefit. Live with the payment amount you have. Put the $4K aside, earn some interest, and if you have more money down the road look at your options again. If you ever get caught in the "layoff" game you'll be glad you put that $4K aside. If your car is reposessed you'ld really be screwed. Your blacklisted credit will prevent your next car purchase or cost you premium interest rates as you'd be a high risk to any bank.
Money in the bank should be a great reason to enjoy your car stress free knowing your protected by that $4K peace of mind insurance.

Enjoy your ride and your interest earnings!

imjd

Nobody has pointed out that how loan payments are treated depends on your state law. Consumer credit laws do vary from state to state and you must read your contract (oh, no!) in order to understand what NMAC's obligation is if you send in more money than the required payment.

Some states a lender is required to apply excess payment to principal - in this case, paying more than the minimum will reduce the total interest you pay over the life of the loan.

Other states may not have the same law and it would be legal for NMAC to treat your overpayment as an "advanced payment," in which case you are letting them use your money for free. You may pay off the loan sooner but you won't save on interest. This is a bad deal for you.

I have also heard of a rule called a "prepayment penalty," in other words if you try to pay off the balance early they are allowed to charge you some percentage of the interest that they will not collect. I have heard that this is illegal in Massachusetts but I have no idea about other states.

gtbigup

Ok I'm thinking that nmac is not your local state finance company, that's why I refered everyone to their website. Now here is the thing , your extra payment has to get there after your regular payment due date, but before the beginning of the next billing cycle.To find out when your billing cycle starts call the toll free number to speak to a reresentative so you can plan your mailing time correctly.

F23A4

While Prepayment Penalties are not officially illegal in New Jersey as far as Mortgage Loans, it is heavily restricted (read: effectively prohibited). However, I dont think the same rule applies to other consumer loans.

Maxxxed

iTrader: (3)

Thanks guys... This thread was very informative! I decided to let the loan ride its way till the end... without pre-paying. I will pay exactly what I agreed to pay every month. Actually, the 60 months of regular payments towards this loan will look pretty good on my credit history... which brings me to my next question.

I checked my credit report from Experian, Equifax and TransUnion. Neither of them have any mention of my NMAC loan. My loan has been active for only 8 months. How long does it take to appear in my credit reports? Will it eventually appear in all 3?

03maximan

Your 2nd paragraph sounds a little scary, mine showed up the next month.
I'd definately look into that. Maybe they sold your loan, doeas it show any other lender with your car loan?

maximalex

iTrader: (1)

good stuff guys!
I learned a lot from this thread.

87MustangGT

Only read half of this, but I'll contribute anyways...

You all are flipping out that you're paying interest first and principle last on your car loans... That's how every type of loan, bond, note, anything works. No one has ever taken any finance/accounting classes here? Hell, even a "Car Loan 101" at your bank or something??

Zero Deuce SE

I don't care about paying the interest first on my payments. I just want to pay the loan off in less than 60 months. I will probably be finished in just over 3½ years.

foodmanry

iTrader: (15)

Jrklar,

Actually you would be hard-pressed to get more interest off the money sitting in the bank (1 to 2% interest) than the interest you are paying on your car loan. In your case it would benefit you to pay the car off. However, you can make "safe" investments that are fairly liquid and obtain a higher than 3.9% interest which should be your financial goal.

Best way to think about money, payments, and investing is if your interest on payments is lower than the potential interest you can get through investments then put the extra money in investments. However, if you have a higher interest rate than what you can receive on investments (i.e. credit cards) then pay off the credit cards.

On a side note if you are fairly young in your early 20's you would benefit from making regular scheduled payments on the car loan. This strengthens your credit rating in case you want to buy a house in the future or need to acquire a loan of some kind.