Car loan financing (Rule of 78 ?) Hello, This is my first post here. I have gone through many threads here and I must say, I found tons of knowledge here. Thanks for this great discussion forum! My question is I just financed my new SUV with a financial services company. They offered me and quote, this is what he said: "ours is simple, it is simple interest". Paying monthly $483 for 4 yrs (well, he wanted us to take for 51 months instead of 48 months and we obliged as it helped him reduce our rates by .5% interest, according to the financial guy. Now we plan to pay it off early, by paying more than $483 monthly. My questions are: 1) Is it disadvantages in anyway for me to pay it off early by paying more than the monthly installments every month? (I read some rule of 78 theorems on other posts and I was wondering if I am at a loss by paying it off early). 2) If it is good to pay it off early, what would be an ideal amount to pay monthly? I mean what would be an ideal amount over and above 483$ to pay it off early and why? 3) Any other things that I can do so that I pay less interests and clear off this debt? Please advise Thanks kamur
Car loan financing (Rule of 78 ?) A simple interest loan means that at the end of each month they will take the the balance that you owe and calculate the interest each month on the declining balance. As for whether or not you should pay the car off early ... absolutely ! I would make sure to make at least six payments and preferably 13. You need to demonstrate to the world that you are able to lick the stamp each month in a timely fashion and make your payments and to be able to sustain that type of behavior for a year at least pay what ever is comfortable and never even be 10 days late because while it may not show up on your credit Bureau anyone doing a direct check, or if you are to be sent back to the same company or bank for your next car loan they would get to see and hear all about it. Good luck with your new car the car guys
