Cutting your term in half without extra payments?

[m0lt3n]

-1 on freerider
i think that have changed with the new consumer protection act. i understand what u are saying,with some older relatives arguing very aggresively with me on that....just make sure with your bank
we had a huge issue getting it confirmed from wesbank,but they have,with what seems no extra admin fees on the extra payments.
the monthly statements also show now that we are saving on interest, with the car loan now being the same as a house bond.
i suggest you just make sure with your own bank before going on my word,but this can save you a lot of money

 

[Yuvan]

Freerider makes sense!! :thumbs:

 

[Spy007]

+1 Freerider.

How it basically works is Interest is calculated on the Loan amount (car loan) Paying extra in ONLY REDUCES THE TERM.

 

[freerider]

molten, I work for a bank and have been in the industry for the past 10yrs

 

[Henry330i]

As far as I know your interest is calculated on a monthly basis. However your bank statement shows your balance with the interest of the full term included.
But if you phone for a settlement value there is a big differance. They then only include the interest incurred up and till that point.

My wesbank statement shows x amount but if I phone for a settlement there is a +- R40k differance

Just my 2c I'm no expert but this is how I see it.

 

[frikkieh]

+1 Freerider.

How it basically works is Interest is calculated on the Loan amount (car loan) Paying extra in ONLY REDUCES THE TERM.

+1
Paying in extra into your account/bond and ensuring it is re-capitalised makes sense. But it does not make sense paying R200 / month extra on a car loan of R200k. It will make very little difference on a BIG loan. It would be best to take half of what you get back from the Taxman or your bonus or 13th checque or whatever is a good amount, to pay that into your car or bond to re-capitalize that. If you can spare that R200, rather ask the bank to increase your monthly deduction by R200, it will still make a difference.
This is how we paid off the Getz in 3 years instead of 5.

I think the biggest mistake is to keep taking capitalised funds out of your bond. Do that if you want to remain in dept for a very long time...

 

[Carbon M3]

If you intend paying extra, you must tell them you want to pay towards the principal amount.

This works well if you intend to pay larger amounts.

Bear in mind that you will be charged an "admin" fee, because they need to re-calculate the interest based on the new capital amount. This is why it only makes sense to pay larger once off amounts into your vehicle loan instead of a couple hundred extra every month.

I try to save a little every month and then pay a big amount, but the money always disappears before it accumulates.

:fencelook:

P.S: A new tool or some gadget appears after the money disappears :rollsmile:

 

[zaleonardz]

I am totally with Don on this one.

You CAN however get a capital reduction, which would impact your interest, but this is only on special request

You have to ask for a capital reduction, with the required paperwork.

Say for example you owe 80k. @ 12% over 4 years

Your monthly payment is R2,106.71 a month.

If you pay 10k in on it, your payment is still 2,106.71 regardless, yes your term does get shorter, and you will save interest by ending your contract earlier,

However, if you want the 10k to be included in for the capital reduction with the balance spread out over the term of the original contract, you have to ask for a capital reduction.

Therefore, by assocation, paying your car on a weekly basis aint going to help you nutting

 

[freerider]

let me help you guys with the extra bux. Here is a site with everything you never knew you needed

www.thisiswhyimbroke.com

 

[Carbon M3]

let me help you guys with the extra bux. Here is a site with everything you never knrew you needed

www.this iswhyimbroke.com

:argh:

:bangdesk:

 

[sivz]

Sorry to drift away from the original PW topic, what is the more preferred interest option, considering current conditions/circumstances in SA, fixed or floating?

For myself, the more logical option was fixed, taking into consideration that I received a decent interest rate, also, I can fore-see my total neccessary car allowance expenditure... although I can't imagine the rate change on a floating rate being very vast?

 

[m0lt3n]

molten, I work for a bank and have been in the industry for the past 10yrs

yes,agree with u and i will go and double check if i am wrong on my statements and give feedback. i had a mission getting wesbank to confirm it,but in the end had it confirmed 3different ways. so it would be wise to just check with your own bank, i dont think i am wrong and u have nothing to lose by checking.
the new consumer act isnt 10 years old