Hey y’all i’m confused. So after learning about how amortization and principal payments towards car loans work, I’ve been throwing over 1k a month into principal on top of the monthly payments. It was also my understanding that Principal payments don’t pay the monthly bill for the following month and only goes to the loan amount so I would still have a bill next month. Well I just paid my bill for feb ($857) and also threw in another $1,500. I checked my loan amount and it reflected for the principal, all $1,500 besides interest went to the loan. However, now I don’t have a payment due for march and only $215 due for April. As far as I know, I should still be due a march payment… Unless somehow the $1,500 went all to principal AND the payment at the same time?
Amortization and Principal
byu/UniqueRegister inpersonalfinance
Posted by UniqueRegister
3 Comments
With my previous loans, you had to check a box for funds to be applied to principal. Otherwise, the money would automatically be applied to future payments. Sounds like yours may be the same.
Unless you specify against principal it still goes against principal, but many/most loans will extend the due date if appropriate. I made a big payment last summer, and it extended the due date until December 2028. So I could have just ignored it until then, but interest would have accrued.
Extra amounts on payments or extra payments going towards principal and going towards future payments aren’t mutually exclusive.
Assuming it’s one or the other is a very common misconception, even for commenters on this sub.