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Crackhead
| | Posted on Friday, February 04, 2011 - 09:59 am: | 
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Typically, the lender will apply the additional payment to your next payment with the added interest.
For example, you are paying and additional $100 per payment, you could be 5 payments a head and could not pay for 5 number of months and still be current on your loan.
If you are paying $100 towards the principle, you would have to make a payment every month to be current on the loan but would have a smaller loan payment.
I usually make an additional payment to be 1 ahead, to keep Murphy away. Then apply future additional payments to the principle. |
Xl1200r
| | Posted on Friday, February 04, 2011 - 10:10 am: |
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21%? You can probably get a CREDIT CARD that has a lower rate.
Personally, I have no idea where people find low-rate credit cards. I have excellent credit (I won't disclose a figure but I can't get much higher) and I'll be damned if I can find a credit card with less than 20% interest. When my current card refused to lower my rate at all, I went and got a 0% for 12 months card and did a balance transfer.
A refi on this loan would be the best option, but as others have said, 21% on a loan - more importantly, a SECURED loan - means your credit before you got the bike was absolute garbage, as in, I've never even heard of a rate that high before for a vehicle loan. Now, with no job, your credit is essentially zero as you have no means to pay anything.
Hell, I got an unsecured personal loan from my credit union for half the interest you have, so unfortunately, you've just kicked your own ass on this one.
Not saying any of this to beat a man when he's down, but look at it from HDI's angle - they stand almost nothing to gain by lowering your rate at this point.
Yeah, you must specify that any additional funds paid are to draw down the loan principal, not to be applied to future interest payments.
This is exactly what they do, and it's a dirty, dirty trick that a surprising number of people aren't aware of. If your payment is $100 and you send in $300 without specifying, they'll literally take the extra $200 and put in their own account (where it's surely earning interest for THEM) and credit your account for the next payment (in this case, two payments). Yes, some have a box to check to specify (my student loans have this online). I typically don't have to worry about it as my interest rates and/or my balances have been low enough to either just wait and pay it all off in one lump (what will happen with 3 of my loans in the spring, got a little carried away), or it just isn't worth the extra payments for one reason or another (the money is better served somewhere else).
Best of luck with this - you're between a rock and hard place. |
Stirz007
| | Posted on Friday, February 04, 2011 - 10:13 am: |
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The Credit Card idea is worth looking into. Many will offer "zero interest for 6-12 months" for balance transfers from another credit card. In my younger days, I would typically get one of these every 6 months or a year, transfer all outstanding balances to it and drop the 12-18% rates I was paying. The other benefit is that every time you close a card account (zero out the balance and close the account), you get a positive hit on your credit score. Weird as it seems, just moving the money from account to account both saves you money and helps your credit score.
The other things to avoid are: Do not default on your loan (for the reasons already covered) and make the note on time. Many CC's and financing have significant penalty clauses, raising interest rates if you are considered a risk. Miss a note or two, and the rate jacks up from 8% to 21% in a heartbeat.
I hope it works out - |
Koz5150
| | Posted on Friday, February 04, 2011 - 10:50 am: |
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So you bought a brand new $12,000 Motorcycle at 21% interest that is your only mode of transportation??? I see two faults here
1. HDFS for even giving you a loan
2. YOU for thinking in some way this was a good idea?
Sorry, but seriously... No sympathy here. Give up the bike and find yourself a cheaper bike or better yet a used car. |
Xdigitalx
| | Posted on Friday, February 04, 2011 - 11:44 am: |
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No,..
(I thought I typed this but I guess I didn't)
When I bought the bike, I had a good job and 2 other vehicles. (1-bank owned). When work slowed... I sold my owned vehicle to help with bills... then got layed off and I had to let the bank owned car go. (repo) it was 350 a month + 180 month for gieco, the bank worked with me for a many months before they came a got it. In the short term, the monthly cost was cheaper to keep the bike. And it has worked for a while.
How about..if the Packers loose... you take over payments....If they win... I just keep paying and work it out. |
Hybridmomentspass
| | Posted on Friday, February 04, 2011 - 01:14 pm: |
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So you had bad credit before (21% APR) and then you let one car go by repo resulting in MORE bad credit.
And youre thinking of letting this one get repo'd as well?
Man you're a glutton for punishment, huh? |
Cityxslicker
| | Posted on Friday, February 04, 2011 - 02:08 pm: |
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.... or a loan on a bike that is no longer produced and the resale market has dropped out from underneath of ?.....
never finance toys
and a house is questionable as well. |
Doz
| | Posted on Friday, February 04, 2011 - 07:35 pm: |
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Time to do the credit card surfin deal. Find a 0% card and pay it down till the special rate goes up, then just find another cheap card....surf it around till its gone. But don't fall into the trap of doing this for everything or adding more expenses to it. Good luck. |
Bwbhighspl
| | Posted on Friday, February 04, 2011 - 11:36 pm: |
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Typically, the lender will apply the additional payment to your next payment with the added interest.
Wells Fargo does not do that with auto loans. I pre-paid almost $400 in interest on my car loan when I realized the overage amount wasn't going only to principle; they were having me pre-pay on the next month's bill. The bill started coming "no payment due", but I thought it was just because I was being proactive. Not so much. I was pre-paying principle + interest. Principle only payments, for WellsFargo, have to go to a different address.
I found this out when I sent in the final payoff payment. It came back with a note saying, "wrong address". That's when it dawned on me.
Bastards.
House payments, on the other hand, do apply it to principle. Not so much on car.
Also, with vehicle loans, it's not "interest first", like it is with a house. You don't pre-pay it. If you have a $1000 loan at 10%, you pay 10% interest per year, or $100. It will vary slightly because it's calculated on the current outstanding balance, which is constantly decreasing. |
Satori
| | Posted on Saturday, February 05, 2011 - 01:31 am: |
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Both Mortgages and auto finance is figured w/ simple interest. Most personal loans are also.
That said the interest is figured monthly on the new principle amount.
Why it should be a surprise the total paid I dont know, you have to sign a Truth in lending statement that shows Principle, interest charged, and the total in large highlighted boxes. Its the law.
I dont know of any banks that charge a more resonable rate that will finance anyone w/o a job. The ones that will charge interest above what you are paying, (yes its true!, try out 34.9)
This gentlemans situation sucks, his best bet is to get to work asap, even if its doing something different.
I wish him luck |
Xl1200r
| | Posted on Saturday, February 05, 2011 - 10:01 am: |
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Also, with vehicle loans, it's not "interest first", like it is with a house. You don't pre-pay it. If you have a $1000 loan at 10%, you pay 10% interest per year, or $100. It will vary slightly because it's calculated on the current outstanding balance, which is constantly decreasing.
That's not true. Your car loan works the same as your house, but the drastically shorter terms and lower loan amounts make it harder to notice. This means more cash up front for the bank and puts more in their pocket in the event of an early pay off. Why would they do it any different for a car?
On top of that, they surely are using compound interest, where you're charged a nominal rate daily, which is then added to your balance for the next day and on and on. This is why multiple payments in a month are better.
(Message edited by Xl1200r on February 05, 2011) |
Court
| | Posted on Saturday, February 05, 2011 - 10:18 am: |
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I agree with above post by XL1200r. There is an effective and simple way to pull this off. I'll spare the details for this discussion but it works great.
In the instant case . . I'd suggest you have a serious heart to heart meeting with yourself and decide (it's really important) if you'll be taking the high road (if you anticipate your credit score being important in the future) or the low road (you never intend to finance anything again),
If you go high . . . (and, by the way, I'm not ascribing any "good" or "bad" to the high/low) you need to arrange to meet with your lender. If you do, I'd be happy to send some ideas and help.
If you go low, enjoy the hell out of the bike, fully aware that they'll be coming to get it and be ready to deal with that repo process where they take the bike and all the costs of the repo and subsequent sale impact become part of a judgment against you, which you also will obviously not be able to pay, and will linger on your credit report for years.
Most importantly . . decide what is best for you and avoid knee jerk decisions. |
Xl1200r
| | Posted on Saturday, February 05, 2011 - 11:05 am: |
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Court, could you describe briefly what the way to get around it is? I remember you telling it before - it revolved around a creative extra payments method - but I can't remember what it was... |
Court
| | Posted on Saturday, February 05, 2011 - 11:11 am: |
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I'll do it later tonight . . . I 'll need to draw a picture and scan it. The snow has finally let me get to the post office today and I'm buried in 124 Buell posters heading to the post office!
On the bright side of things . . . it'll be a lot more tranquil here at home. My wife didn't find it as funny as I did when the 4 cases of 2" diameter poster tubes arrived. Those things look small one at a time . . the cases looked like they were delivering a washing machine!
I'll try to put it up here tonight or tomorrow. |
Wolfridgerider
| | Posted on Saturday, February 05, 2011 - 11:17 am: |
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. |
Xl1200r
| | Posted on Saturday, February 05, 2011 - 11:18 am: |
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Posters??? Did I miss out on something again? |
Court
| | Posted on Saturday, February 05, 2011 - 11:36 am: |
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>>>Did I miss out on something again?
Nope . . it's been all over here. For the month of January . . anyone who bought over $100 of Erik Buell Racing stuff I offered to send a Buell poster to.
I was going to mail last week and there was no way to get out. . . . so today is the day I go strike fear into the folks at the USPS!
Likely either do it again in March . . or perhaps send one to each person as they register for H2011. |
Xbniner
| | Posted on Tuesday, February 08, 2011 - 10:09 am: |
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Well crap, I read thru this yesterday then went home and checked my latest statement for the bike. (I wouldn't normally buy a bike on a loan but I wanted to take advantage of the fire sale and it was 3.9% which is really cheap. I get 3% on my checking account.)
Turns out I haven't been paying to principle like I assumed, my next payment is due on 9/7/2011.
I used to work in the auto industry and every one of the banks we used were not only simple interest but automatically applied any overpayment directly to principle.
If I would have actually read all 40 pages of the contract this would have been disclosed, but I still have to say I'm shocked at how shady this is. They are essentially holding my next 8 payments hostage.
Time to stop overpayment on that loan and just pay myself. |
Sifo
| | Posted on Tuesday, February 08, 2011 - 10:20 am: |
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If you call them and explain the situation they will probably apply those past overpayments to the principle. |
Xl1200r
| | Posted on Tuesday, February 08, 2011 - 10:57 am: |
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Both Mortgages and auto finance is figured w/ simple interest. Most personal loans are also.
That said the interest is figured monthly on the new principle amount.
Just noticed this post and wanted to reply. Again, NO bank is using simple interest on a loan. They're using APR or APY, and in eaither case they're charging that interest DAILY, not monthly - as in, you get charged interest 30 times, slowly building up your balance so the interest charge the next day is even more, before you finally pay your bill at the end of the month. This goes for cars, bikes, homes, personal, credit cards, student loans, whatever.
If your APR is 5%, you're not getting charged 5% per year, your getting charged 0.0137% each DAY. It doesn't sound like a lot, but it makes a difference. On a $30,000 car, that's a little over $4 per day, but that means the next day your getting charged that interest rate on $30,004.
Long story short, if the interest were only charged per year (simple interest), you'd pay $125 per month in interest. If it were charged monthly (as Satori suggested), you'd pay the same since your payments fall in line with the interest charges. But the truth is you pay interest that's compounded daily, and at the end of that first month you'll pay $127.56. It may not sound like much, but over 12 months a year and a 5 year loan, it adds up.
Apply that same principle to a mortgage with hundreds of thousands of dollars and 30 years of payments and you can see why you end up paying roughly twice the value of the loan by the time you're done. |
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