Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)

If you pay off a car loan do you still pay all of the interest on the remaining portion?

Answer Question
 
Anonymous

Asked by Anonymous at 11:51 AM on Dec. 3, 2008 in Money & Work

Answers (7)
  • I may not be right, but I think that when you make a "pay off", it's just the remainder balance, and with no additional interest added. The interest only comes when payments are made each month. Make sense? I dunno, maybe someone else can explain better : )
    JDanesMommy

    Answer by JDanesMommy at 11:54 AM on Dec. 3, 2008

  • I'm not sure, but it seems like with most loans, you can call the lender and they can give you..I don't know what it's called, but like a "balance due" that if you paid it off right now you would pay this much. It's usually an amount where they still get some money (interest) but not nearly as much as if you continued making monthly payments until it was paid off. I don't know this for sure, but it seems like that's what I've seen. Try calling the lender and asking.
    tropicalmama

    Answer by tropicalmama at 11:58 AM on Dec. 3, 2008

  • I agree with PP, usually the payoff price includes a portion of the interest but not the whole thing.
    riotgrrl

    Answer by riotgrrl at 12:14 PM on Dec. 3, 2008

  • Okay, Thanks ladies! My husband is away at training right now and he has all the info on the lender and everything. I just was just wondering b/c I think it is better for your credit if you stick it out and pay the loan everymonth instead of just paying it off so I wanted to see how worth it it is to just pay it off.
    Anonymous

    Answer by Anonymous at 12:18 PM on Dec. 3, 2008

  • It's the same on your credit rating if you pay it off all at once or if you make the payments. It's usually a lot cheaper in the long run to pay it off sooner.
    riotgrrl

    Answer by riotgrrl at 12:22 PM on Dec. 3, 2008

  • Pay it off! Call the lender and ask for a payoff amount. This will be a reduced amount with the total interest pro-rated. They will also tell you that this amount is only good until the following date. You will save money in the long run and any account you have that is paid in full looks good on your credit. Also, it will lower your debt/credit ratio if you pay it off...debt-to-credit ratio is the amount of money you owe versus the amount of money you make...the lower the better. So, if the car is paid off you show less debt going out and more money coming in and that's a huge plus!
    mizkaye

    Answer by mizkaye at 12:49 PM on Dec. 3, 2008

  • I used to work with loans all the time...here is how it goes. In any loan your interest accrues on a daily basis. Meaning, if you pay the full amount that is stated on a bill that you recieved then you will have interest left to pay because the amount given was the amount at the time the bill was sent. So there are additional days that are added. The best way to get the exact payoff is by calling your lender and asking them what the amount is for that day and pay if off that day. If you plan to pay a few days from the date that you call, you need to ask them how much interest the loan accrues daily. This way you can add the additional days to the pay off given to you. So if your payoff is $3000 today and you want to pay 3 days from now. If you are accrueing $2 a day in interest then in 3 days your payoff will be $3006.
    tpalmer

    Answer by tpalmer at 4:51 PM on Dec. 3, 2008

Join CafeMom now to contribute your answer and become part of our community. It's free and takes just a minute.
close Cafemom Join now to connect to other members! Connect with Facebook or Sign Up Using Email

Already Joined? LOG IN