Toyota's Financing Scheme

I have never seen this in any other car manufacturer dealership or using an outside financing company. All of those, if you pay ahead, just note the additional money paid against the principal and still charge the normal monthly payment.

Toyota however does it entirely different. They do put the additional amount on the principal but then drop the monthly payment to the amount that would take the agreed upon time to pay off. In my case, I financed 50%, financed for 4 years on a 2015 DCSB TRDOR but was going to just pay it off in three [got a better deal due to financing it] months. I have one payment left of a bit over 4 grand but the monthly payment, if carried to the end of term, is now down to $75 a month. Never seen this done, why does Toyota do this, just to drag the time out and make more off interest charges?

Anyways, it really is one more payment and it's mine............ Check goes out on Friday. I LOATHE payments of any kind.

 

awesome. I'm done with payments as well, but originally i was financed through toyota financial. I had to as i bought the truck 3 hours from home and wanted it that day. I quickly refinanced through a local bank to avoid the very b.s you mentioned. I don't feel comfortable dealing with that much money over the phone, internet whatever. I prefer to walk right into the bank and deal face to face.

 

Congrats!

 

They didn't do that with mine, although I only prepaid about $1,000 in a lump sum at the very beginning of the loan, then went back to normal payments. The $75 may not be a recasting of the loan, and may just represent some interest payment that needs to be made to keep the outstanding principal from rising.

Whatever the reason, why would you call this a scheme? It seems beneficial to the customer. Other companies require you to pay the larger amount whereas Toyota is giving you the option.

 

That $75 payment is just for the next payment. Your future payments will be back to normal(if you were still paying on the principal). You have to specify if you want the extra money to go to principal only or write a separate check for principal only. Your loan still gets paid off/down just as fast. The advantage is you could make a smaller payment if you ever had to. It's not really any kind of scam.

 

I didn't say it was a scheme in a bad way, just more of a British way of saying financial agreement but replacing agreement with scheme.

It is weird though, I have NEVER seen ANY typical car or house loan agreement set up in this way. Additional sums go on the principal, monthly payment stays the same, the term of the payment would automatically shorten due to the additional principal paid against the total amount.

 

It's pretty typical for car loan.

 

No, if you add that $75 monthly payment up, it, along with interest, comes out to the 46 remaining payments left out of 48.

 

It was the same way when I financed a Lexus I owned through Lexus Financial. I always paid extra and the next month's payment kept dropping to the point where I could have skipped a month. I kept paying the same amount every month regardless of what the new payment was. When I called to inquire about this, I was told that all extra went towards principal. So if I paid my normal $200 payment and that month it had dropped to $75 then $125 extra went towards principal. Sounds pretty great to me. If I did pay $75 that month, it would have gone back up to the normal amount the next month.

 

Your payment dropped for the remainder of the loan? So you only owed around $4k after the 50% payment? $75x46=$3450

It's probably more to do with the way you paid the loan. Most people don't take 4 year loans and pay them off in 3 payments.

 

Already made two payments of more then 4 K, the additional remaining amount is around 4 K. I'm sure the additional is up front interest [b4 principal] they are trying to get. Not an issue as it'll be paid off in less then a week. [it'll also allow me to be more flexible with the type of car insurance I need to carry, my 2014 FJC just has storage on it right now as I park it in the winter due to salt]

 

It's been a while but I believe Toyota was adjusting the payments for my loan when I was sending more than the payment schedule called for. I ended up paying it off a few years ahead of time to save the interest payments.