Toyota Financial Tricky Payment?

I would say that your banks are in fact, the minority. It works out great for you, but most lenders do not operate this way. So consider yourself lucky, but every bank or credit union I've worked for, done business with, or regulated has had their systems set up to pay current payment, then penalties, than interest, and THEN principal.

 

Technically if you pay off your loan with double payments it will be payed off twice as fast, just be forewarned you pay the interest off first. The auto loan has a fixed amount of interest so you are still paying the same amount of money over half the time.

For example I owe 2300 dollars in interest over the life of my loan, if next month I pay 2300 dollars more than my monthly payment, they simply take that money and pay off the interest...

 

i would get away from toyota financial. when i first got my truck i financed through toyota. after i paid off a little i refinanced through my bank, usaa. it dropped my interest rate about 4% and i could make extra payments any time i wanted to. i paid off my 6 year loan in about 2 1/2. I saved alot in interest payments.

 

That is who financed my truck at at 4.79% on a used truck I am very happy. A bank that takes care of its people.

 

It was less than half. Loan was for 24 months. I paid double payments for 10 months.

 

Any of you guys in finance,,29yrs at it here,, will try to make this clear. The majority of auto loans now are "simple interest" with a fixed rate or APR. The finance company figures your interest on a daily rate. Hence if you pay 1 day early you will pay just a little less interest that month,the difference going to principal, if you over pay yes the $ goes to the next pmt, but to make this work in your favor, you would need to do this every month, pay a little over and as early or before the due date as possible, you pay a little less interest each month.

Call your lender or look at your contract ask for or look for the "daily amount" this is the daily interest being charged you. So if you pay a day early your interest(finance charge) is that much less, you can get ahead and pay off the loan early, but if you skip a month because "you're ahead" the next payment paid will have a higer finance charge, all because the interest if figured daily.

confusing, and hard to explain. Hope this helps

mark

(gmac) financing arm of gm

 

Old Dad is spot on without going into crazy finance jargon and detail which has already been done accurately w/o being read and applied. Otherwise this thread would have stopped a dozen or so posts ago...

LawP is financing through a shylock. Don't listen to him. We have regulations in the US that lenders have to abide by (seperate argument all together).

Good Luck!

 

did you borrow your money from the mob?

 

So I was right. Damn internet is full of bs information.

 

^^^ so what does that mean? every extra you pay goes towards the principal? so why is the amount for next month payment go down? I had the same question and they confused me w/ their terminologies..I should've paid more attention in the Accounting class rather than focusing the hot brunette that was sitting next to me!

 

Exactly! If you pay early, they lose money.

IGNORE the "You're paid ahead" on your account. Continue to pay the monthly payment PLUS additional payments (towards principal). This will save you more money and less time over the lifetime of the loan.

 

Thank you guys for taking the time to explain! i still think I should've paid more attention in class

 

Ok glad thats all cleared up now I have another question lol. My brother had a car loan through ford. He paid it off early and they sent him a check for the interest they calculated in when making the deal but didnt get charged to him cause it got paid off early. Will toyota do the same when I pay it off early or is this a differant loan?

 

That is usually on a few dollars, and yes most banks will send it to you. That is because the payoff payment if calculated with 10 days on interest built in. If you pay it and they apply it within 7 days, you will get 3 days interest back.

 

Just to make life a little more confusing, I contacted Toyota after i saw this thread, made my first payment last week and also noticed that since I overpayed, it dropped my next months amount. After a few emails with toyota financial, this is the last response I've gotten


Thank you for contacting Toyota Financial Services. If you send your
principal payments separately to an alternate address, we can apply the
extra funds in a manner as to where your account will not appear as paid
ahead. However, due to the way simple interest accrues on your account,
the affect to your account will be exactly the same as if you included
extra funds for principal with your monthly payments.

You may send payments to be applied toward your principal balance to:

Toyota Financial Services
PO Box 9490
Cedar Rapids, IA 52409-9490

Please include the following information with payments to principal:

" Your account number
" A note explaining you would like the payment applied to principal
only

Please continue to send your normal monthly payments to the address
indicated on your billing statement.

We value your business and look forward to servicing your needs in the
future. Thank you for visiting us at www.ToyotaFinancial.com.

Sincerely,

Toyota Financial Services

 

That statement about it having the exact same affect doesn't seem to add up to me. Since with a loan you are paying off mostly the interest at the beginning of the loan, and actually pay off the financed amount towards the end of the loan, wouldnt sending a seperate check every month reduce the amount of interest dollars vs. actual financed dollars?

 

god damn accounting should not have been an 8am class, apparently I don't absorb information when i'm half asleep and hungover

 

now this sounds like a traditional loan, old rule of 78's, amorization etc, it would be called traditional non ffp(not a simple interest loan), my abililty to explain is limited,,I was originally the guy that knocked on your door cause you wouldn't answer the phone about the late payments,,I didn't always knock either, sometimes came with a key and just drove her away.

mark

 

again on paying most of the interest at the begining is really not happening any longer, as toyota wrote the other poster, "simple interest" is figured daily, on the old traditional loans the interest was figured on a monthly basis. And most of the payments at the begining of the loan were interest.

come on guys, if I have to keep on, I will bill you for this info

mark

 

naw, I dropped out of college and went into the Navy, just got lucky to start with my company back before a degree meant so dang much.

it's really easy, ok not really

mark