Car Payment (Am. Honda) - Paying Extra Principle? [Archive] - Drive Accord Honda Forums

: Car Payment (Am. Honda) - Paying Extra Principle?


Athlete218
11-08-2008, 09:32 AM
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. :wave:

MySilver_08
11-08-2008, 09:47 AM
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. :wave:

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.

Athlete218
11-08-2008, 10:02 AM
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.

MySilver_08
11-08-2008, 10:05 AM
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.

cloudy77
11-08-2008, 10:42 AM
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.

turbodave
11-08-2008, 11:49 AM
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.

silver08sedan
11-08-2008, 12:06 PM
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.

Big Red
11-08-2008, 12:11 PM
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!!:thmsup:

elp_jc
11-08-2008, 12:37 PM
It's PRINCIPAL, not 'principle'. Kids these days :lmao:. Have a good one gang.
JC

Stephen83
11-08-2008, 01:38 PM
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.

StanleyD2S
11-08-2008, 04:36 PM
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?

elp_jc
11-08-2008, 08:04 PM
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:D. Take care.
JC

lpaudio2
11-08-2008, 08:26 PM
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...

taffwh2008sedan
11-08-2008, 08:29 PM
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.

Marc08EX
11-08-2008, 08:37 PM
you can specify any amount you want to pay.

tbowie
11-09-2008, 04:47 AM
I dont pay through owner link - I use my bank's online billpay to "mail" a check. I pay extra every month and it is automatically applied to the principal and noted on my monthly statement. As stated previously, this decreases your next month amount due. No need for an extra check. From my statement "When making early loan payments or payments greater than your 'Regular Payment Amount', your principal is reduced and a credit shows toward your next month's payment."

EvolNtent
11-09-2008, 05:05 AM
I hate the Am. Honda payments. My payment is $516.33 and I usually pay $1000/month. Then the next month they skip payment. I think they do this so it's more difficult for you to pay principle off b/c you will have to manage the account more. That way they get more interest out of you. I'm looking to switch mine and have my bank pay it each month as someone stated.

spikeitaudi
11-09-2008, 05:26 AM
Don't skip your payment even if you can. Just keep paying 1000 every month.

npolite
11-09-2008, 05:33 AM
I just checked with my sister's loan. It does show how much of the principle is being taken off each month. For example, if you put say $600 in a month then your principle should show as $550 and $50 for interest even though she only needs to pay $350/mth. While next month your total due will be zero, you should still make your normal payment.

tbowie
11-09-2008, 05:35 AM
Don't skip your payment even if you can. Just keep paying 1000 every month.

exactly. My payment is $339 and I epay $700/mo every month regardless of what my statement says.

EvolNtent
11-09-2008, 06:07 AM
I know I need to keep paying but it's a hassle. It defeats the whole purpose of "easy" pay if you still manually sign on and make the payment.

spikeitaudi
11-09-2008, 06:47 AM
And you think writing a check, putting it in the envelope, putting a return address, then sealing the envelope, then putting a stamp, and lastly putting it in the mail is easier? :):)

taffwh2008sedan
11-09-2008, 08:51 AM
I know I need to keep paying but it's a hassle. It defeats the whole purpose of "easy" pay if you still manually sign on and make the payment.

Every bank I know of has an payment page on their web site where you can schedule single and recurring payments and the bank takes care of sending the money for you. It's your friend, use it. I don't let ANYBODY take money automatically from my checking account ever since on my last Mercedes they decided to withdraw an extra payment from me at the end of the lease, then took them 4 months to refund the money.

1stHondasofar..
12-11-2008, 07:21 PM
putting cash toward a depreciating asset is not the wisest decision, even with Honda's 52% resale value. Anything extra you put towards the car must be tallied up over the reduced time period it would take to deplete the principal. Then, take the resale value of your car in that year, say 2012, and see if your decision makes sense. extra 150 over 8 yrs is 8k. I assume the car will lose more than 8k in the first 4 yrs of the car's life. You would probably save under $1000 in interest total, from your strategy too. so, that does not hold water either, I believe.

PKT
12-11-2008, 10:05 PM
You would probably save under $1000 in interest total, from your strategy too. so, that does not hold water either, I believe.

Yeah.... are you sure about that? It really depends on your interest rate. You can save several thousand dollars by paying off early, depending upon the loan...

clewttu
12-12-2008, 06:17 AM
and if you have 0% interest, there really is no point at all...is there?

JamieJam1AIM
12-12-2008, 06:25 AM
FYI Also something so People dont know and they dont always tell you, you can request to defer a payment once every 12 months so If you dont have enough to cover one month... you can skip the payment and then a 60 month finance would become 61 and so on.. it wont go on the credit report so long as you contact AHFC and get a transaction #. But the Intrest on the loan does accrue.. if you have it, just pay the interest for that month... I had to do it some years back with my 5th Gen in 1994 when My gov't job fouled up the payroll and we didnt get paid for a month...

Jakerx
12-12-2008, 07:23 AM
I hate the Am. Honda payments. My payment is $516.33 and I usually pay $1000/month. Then the next month they skip payment. I think they do this so it's more difficult for you to pay principle off b/c you will have to manage the account more. That way they get more interest out of you. I'm looking to switch mine and have my bank pay it each month as someone stated.
This makes absolutely no sense. They are not "skipping" payment. It's just that no payment is due. You can still make a payment if you wish.

rexflexall
12-12-2008, 10:14 AM
I called American Honda Financing about this, and the person confirmed that ANY money paid over the monthly payment goes directly toward the principal of the car. I get my monthly statements in the mail and even though the maturity date is the same and the monthly payment goes down, the principal in the car is less than if I were to just make the minimum payment (just compare the principal to the car with the principal if you were only making the minimum payment monthly). If you pay double your monthly minimum payment, you will get the next month's statement saying you owe $0.00 for that month. This is just a ploy for Honda to keep making interest money off of you if you don't pay that month. Even if it says $0.00 dollars you can pay anyway, and all of that money will go straight to the principal of the car. The quicker you pay off the car the less money Honda Financial will get off of you because of their interest rate. And because Honda Financial has no prepayment penalty, you can pay as much as you want every month.

tn6478
12-12-2008, 03:56 PM
All wrong. You pay your payment as stated in the invoice. But you write another check and send it to a different location. On the check you write Principal and account number. I send my check to

American Honda Finance Corporation, Cash Management Center
P.O. Box 165007
Irving, TX 75016

Please write "Principal Payment" and your full account number on your check to ensure the timely processing of you payment.

1stHondasofar..
12-13-2008, 03:58 PM
Paying the principal down does not improve your credit score in any fashion. It is a non revolving loan. Not an open, revolving line of credit or a heloc etc. Many people pay extra principle thinking in this fashion, totally false. It would only improve your credit score by paying off revolving accounts, such as credit cards. So, when someone qualifies for an interest rate below 5%, IMO, do not pay anything extra because it is not justified. The lost opportunity on the extra money spent far exceeds the extra interest surrendered over the 3-6 year period. 3.9% is a delightful rate. Enjoy it and save your money, pay what the bill says to.

itstheo54
12-13-2008, 04:16 PM
sorry, no clue just payed cash, just can't get credit which kinda sucks

SoK
12-13-2008, 05:34 PM
my loan is through chase and i pay an extra 50/month and i believe it automatically goes to principal if you pay over the required payment.