Car Payment (Am. Honda) - Paying Extra Principle? - Drive Accord Honda Forums
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post #1 of 33 Old 11-08-2008, 09:32 AM Thread Starter
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Exclamation Car Payment (Am. Honda) - Paying Extra Principle?

I have my auto loan through American Honda @ a 3.99% fixed apr for 5 years....I did this in case I was short on money one month, then I wouldn't be cutting it too close. I'd like to pay an extra $150+ per month & get the thing paid off in 3-4 years instead of 5. I make my payments online directly through my checking account & from my understanding, you have to make an "extra payment" a certain way to make sure it counts completely towards principle.

How do I do this? Would I just make my normal monthly payment online like I always do & mail in a check for $150 each month w/ the statement? Do I need to somehow notate that my extra $150 is for PRINCIPLE ONLY? not sure how this works as I am only 25 years old & this is my first auto loan (previous cars have been in my fathers name except an 08 4-door Si i had for 6 months).

....any help appreciated.

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post #2 of 33 Old 11-08-2008, 09:47 AM
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I have my auto loan through American Honda @ a 3.99% fixed apr for 5 years....I did this in case I was short on money one month, then I wouldn't be cutting it too close. I'd like to pay an extra $150+ per month & get the thing paid off in 3-4 years instead of 5. I make my payments online directly through my checking account & from my understanding, you have to make an "extra payment" a certain way to make sure it counts completely towards principle.
How do I do this? Would I just make my normal monthly payment online like I always do & mail in a check for $150 each month w/ the statement? Do I need to somehow notate that my extra $150 is for PRINCIPLE ONLY? not sure how this works as I am only 25 years old & this is my first auto loan (previous cars have been in my fathers name except an 08 4-door Si i had for 6 months).

....any help appreciated.
I don't know if that's for American Honda, but when I made extra payments, they "extra" counted automatically towards the principle. I also noticed that my payments were dropping after a year.
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post #3 of 33 Old 11-08-2008, 10:02 AM Thread Starter
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I don't know if that's for American Honda, but when I made extra payments, they "extra" counted automatically towards the principle. I also noticed that my payments were dropping after a year.
yes, it is through the american honda website w/ my checking acct.

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post #4 of 33 Old 11-08-2008, 10:05 AM
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yes, it is through the american honda website w/ my checking acct.
My bad, I meant to say, I don't know if that's "true" for American Honda. BTW, I pay the same way you pay. Same setup online thru checking.
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post #5 of 33 Old 11-08-2008, 10:42 AM
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If you make your payment online, I assume you are using the Honda owner link website. Sounds like you already scheduled your auto pay. To make another payment, just click the Make Payment, or choose the Payment Options - Pay online. Then enter the amount you want to pay under 'Enter Additional Amount to be Paid:' and click submit. Confirm your payment then you are done.
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post #6 of 33 Old 11-08-2008, 11:49 AM
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It's my understanding, although I haven't confirmed this, that if you want to pay more and want to all to go toward principal, you need to send a separate check, and write on the memo line "for principal only". It also wouldn't hurt to wrap a note around your check saying the same thing.

Oh, and on the memo line, also include the account #.

That's what my dealer explained to me when sending extra money to American Honda, you have to specify that it be for principal only, or they will treat it like any other payment.

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post #7 of 33 Old 11-08-2008, 12:06 PM
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When I send in extra money it reduces my next due payment. With my wife's acura we were several months ahead that if we didn't want to we didn't have to make a payment for a year.

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post #8 of 33 Old 11-08-2008, 12:11 PM
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It is best to contact American Honda and get it straight from them especially if you can print it from their website or get it mailed to you. Get the person's name that you talk with for further verification, if necessary. Keep an eye on the details of your account to ensure that the extra $150 is actually going to principal. I admire your plan to pay off early as you build your credit score. Good on ya!!

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post #9 of 33 Old 11-08-2008, 12:37 PM
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It's PRINCIPAL, not 'principle'. Kids these days . Have a good one gang.
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post #10 of 33 Old 11-08-2008, 01:38 PM
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I'm want to do what the OP is doing also. Looks like mailing a check is the only way cuz i don't see it on the owner's link where you can designate extra $ toward principal. It would be great if they did.
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post #11 of 33 Old 11-08-2008, 04:36 PM
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I made a one time payment online and paid more than the amount due, and the next month I got a statement saying I owed $0 for the month but the time to maturity stayed the same.

Does that mean the excess of what I paid of the amount due went to the principal? Or does it mean that I am still paying interest for the excess amount I paid? I thought I would have to keep on paying monthly but would have a reduced monthly payment. This is confusing!!!

Would i have to give them a call to have them take off the excess from the principal?
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post #12 of 33 Old 11-08-2008, 08:04 PM
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Your best bet is to just save the money (separately if you don't have the discipline not to spend it) and pay off the loan when your loan balance equals your savings. With the way things are going, you have emergency money as well, since your payment schedule would stay the same anyway.

If you guys don't know how a loan is amortized, look online for a calculator, so you can see how bad you're getting screwed, and hopefully next time you'd buy a car CASH, whatever you can afford. Like the good ol' days. Take care.
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post #13 of 33 Old 11-08-2008, 08:26 PM
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Ok... the last post has conflicting advice.The sooner you make extra payments, the less time you will be accruing interest on the outstanding loan amount.

Also, taking a loan is a very very smart move, even if you have the cash. Take the loan pay it down early through principal payments as the poster did. This will build credit score for things like home purchases, etc. I did it this way, and in the end I paid my loan off two years early, and only was out about 1k in interest. Thats a small price to pay when you think about getting a prime rate on a 30 year home loan...

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post #14 of 33 Old 11-08-2008, 08:29 PM
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When you send more money than the due amount, any extra MUST go to principal by definition. What else would it go towards? You don't owe interest until the following payment.

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post #15 of 33 Old 11-08-2008, 08:37 PM
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you can specify any amount you want to pay.

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