How do you navigate payments with Toyota Financial?

You don’t understand bro, I’m going to invest all that extra income and make more money in investments & passive income!

(i live paycheck to paycheck)

 

It’s not that big of a deal to still continue to make monthly extra payments, just need to make a few more clicks…
Just wanted confirmation how others do it, and point out dumb their layout / process is…
It’s not worth refinancing for just a few more clicks. Will also never make sense, I got a 3.9 and right now used car loans through my credit union are 6.64%…
don’t think it will ever turn the corner where would make sense at this point prior to payoff

 

Yeah, totally comfortable with the payment, just wanted all behind me, so I’m going to pay extra every month…
gett’er done!
0% or even 1.9% is hard to come by during these economic times.
I got lucky to get the rate that I did, I’ll take it

 

Oh, I get it!
I understand…
but that’s not what this thread is about…
I’ve been investing every extra dime I have since I was 20 years old, I hit the finish line…
Minimal savings, emergency fund gets invested, since I was 20, $250 a month into an Ira, maxed out 401(k), minimum $8000 a year tax return gets thrown into cash investments, any additional extra funds I have, gets thrown into the investments…
There was no desert toys, boats, motorhomes. I was on a mission…
I’m only 52
The discussion should be why didn’t I pay cash, I don’t want to touch the investments at the moment…
That’s a discussion for another thread.
Tossing another measly hundred dollars at my payment every month will be over three extra payments a year, I would cut the timeframe down substantially..

 

When I purchase a vehicle I always set up my own amortization schedule in MS Excel to follow along and calculate my extra payments and mostly interest. This allows me to make sure that a bank or in this case TFS is charging me what I expect. Paying early on a loan can be hard to track without having an amortization schedule to tracking the interest.

So I do a couple of things to save interest. I pay weekly which saves me money by paying them as soon as possible. I also set up a payment usually around 25% higher than my agreed monthly payment.

By paying in this manner I had a reduction of about 35% over the loan in interest in my last vehicle. I never once had to make separate "principal only" payments. As Toyota states, any payment over the contracted amount will be applied to the principal. One other option that is nice with TFS is that when you make extra payments in advance you will see that your TFS loan may not require a payment for 4 months. You can if needed skip payments without penalty. This unfortunately makes you pay the interest you saved, but if some hardship happens, it gives you a short lifeline if needed.

I thought TFS was very easy to work with, much easier than my local bank.

 

One could say it's a few more hoops, but if you set up everything for auto payments, it's a one time annoyance and then it's done.

• Option 1: set up auto-pay for the minimum amount = see the loan and interest owed through for the full duration and amount
• Option 2: set up auto-pay for larger than the minimum amount with no delineation = you are effectively pre-paying the next payment's worth of P&I, which will continue to eat forward until you've paid things off a bit early, but paid the P&I at the original proportions
• Option 3:set up auto-pay for the minimum amount, then concurrently set an extra "principal only" payment that rounds up the value to what you're comfortable with = Pay off early and pay less interest than originally determined for the principal due to eating down the base principal that interest is calculated against
  • This approach is smarter than option 1 or option 2 for companies that provide no pre-payment penalty and allow you to set it up
• Option 4: set up any of the 3 combos above, and if your circumstances allow, contribute extra to a dedicated side account with high interest earning potential. As soon as your balance in this account exceeds your loan balance use the funds to pay off your loan and walk away early.
  • This approach is always the most advantageous if you can have stomach the dedication to the approach and not overextend yourself. Borrow at an interest rate lower than you can earn elsewhere, and reap the interest rate difference at the end of the timeline. Example: TFS or your Credit Unit gives you an auto loan option at 3.9%, but your CU or bank offers a savings account or CD at 4.25%... it's more to manage, but in this case, holding the cash or accumulating it, and letting the interest draw out means that your banking a net 0.35% interest on the funds. If the interest rates aren't fixed, you have to monitor so they don't flip on you, but it's a success strategy for those that can hold themselves to it

 

The way it was explained to me, anything extra along with your initial monthly payment doesnt go to just principal, thats why your monthly payment due date gets kicked down the road.
I dont need to kick the monthly due date down the road, plan is to most efficiently way pay extra to minimize what goes to interest & pay off early.
So youre saying anything beyond your monthly goes to principal only isnt accurate, from what customer service explained to me, along with the screenshot I inserted...
Overages goes to both P&I, & payment due date gets kicked down the road.
Long run, it will cost you more doing it that way, as also explained in my attached screenshot.
Am I wrong?
TFS is stating if you want any overages above your monthly requirement going to "interest only" , it must be sent as a separate payment. Must use the interest only tab within TFS webpage...
Thats the only way overages go to "principal only"

 

Well said, & yes, this is the way, option 3...
but ofcoarse if I come across a larger chunk, or if I decide to unbury one of the mason jars in the backyard, ill throw more at it.
Easy enough, but dumb!!!
Thats what ill be doing!

 

I can confirm that the extra money I sent paid down the principle. My last vehicle Rav4 Prime I saved $1579 in interest based on early payments. No payments made to specifically the principle. Has Toyota changed there contract terms?

I tracked every month in a spreadsheet and a specific column to add the extra payment which pulled off of remaining principle balance. This effectively reduces the interest to be paid on the next payment. Every dollar I sent over and above my contracted monthly payment. This accurately followed my amortization spreadsheet to the penny until it was paid off and I do weekly payments and send extra each week as well as extra occasional extra lump payments. Every extra cent was removed from principle and lowered my interest bearing balance.

I will have to contact TFS myself before I sign again for my truck when it arrives. From what you are saying, they have changed there terms and how they apply the monies now.

 

Not too many good financing offers out there, I see TFS was doing something 1.99% on new Tundras, great if you want a Tundra. Toyota does not have much trouble moving vehicles.

The information provided in this thread is an eye opener I had no idea about how Toyota is applying payments made to them.

 

I don’t know how things were before with tfs.
Every time I get a new loan, I always call that bank and verify that all extra payments go to principal only, sometimes they have to change a couple of settings in the account for that to be implemented.
They tfs wants you to utilize this principal only tab now in order for all overages to go to principal only

 

Just navigated my first principal only payment, easy....

 

Timely thread. When my Tacoma is paid off in April, we'll apply at least some of that to the principal on my wife's RAV4.

BTW, I bought the Tacoma in early June 2020. Most of the banks were still closed or had limited staffing, so I went with the higher dealer offered rate. In late March 2021, my credit union offered a 1.88% loan on new or used vehicles. I refinanced and have saved quite a bit compared to the 3.99% dealer offered rate.