Toyota Financial Question - Explain this to me

I am planning to pay more than the monthly installment. I wonder whether the overpaid portion will be used to reduce the principal automatically. I wasn't able to find the relevant information on the TFS website, and the paper bill I received does not talk about it either. Thanks!

 

I also thought that this is just a recalculation of the amortization table, but after a bit of common sense I doubt it.

Let's say OP has a 48 month table
He paid $80 over his coupon, and saw his new coupon drop $10

There is just no way that $80 today is worth $480 (48*10) over the life of the loan.

My guess is that TFS is future discounting the next payment. Perhaps if you keep paying ahead an amort table recalc will take place. Bottom line: No worries. Just keep paying $400 a month. TFS is not doing anything illegal, or even anything that will cost you money. Paying ahead *will* save you interest. A more practical question you might ask TFS is whether you can skip a monthly payment in the future once you paid ahead by at least one coupon.

If you are into the geekery of loans and stuff, or are just a little paranoid the simplest thing to do is to ask TFS what you payoff amount is today and compare it to a spreadsheet that computes your present principal based on payments and monthly interest. Car loans are so-called simple interest loans, meaning your monthly interest is your outstanding principal from your last coupon * apr divided by 12. Don't expect the numbers to be exactly the same (the reasons are boring,) but close enough to allay any worry.

 

Payoff can be viewed at anytime on the TFS website. Just click on view outstanding balance. I check mine every time I make a payment just out of habit. Even on the leased v....

 

Nothing special, Ally does the same thing.

 

Concur.
Although I do not trust them due to a personal bias, TFS is undoubedly not doing anything illegal, and they're probably not really coloring outside the lines ethically speaking either.
In fact, they may view a reduced following monthly payment as a benefit "rewarding" the customer for a prompt and/or extra payment.
If you think about it, it also tempts the customer into taking them up on the offer for the reduced installment. After all....they lose money on early payoffs.

Either way, there's no harm in sticking with TFS and making the extra payments.
If you're using TFS, then you've already given up any benefit of using a CU and striking a better cash deal, so there's no point in a re-fi for the car loan.

Stick it out.
Pay extra.

Done.

 

CU is mostly good for car loan. this was my preference....
mine is through TFS Souhteast. they have a funky calculation.
I paid mostly 45% more monthly to reduce much the interest and current bill show my due date is a year later.
correct; all extra $$ goes to principal.

Totaly agree no need re-finance. pay the loan with more money and will be surprised the total interest would be pretty low.
I had to use TFS since the dealer made me a deal to give me all discounts when financed through TFS and plus nice $ trade value for my 10 years old Hyundai with 160K+ more miles.
they gave me 2 choice to give me all discounts: through TFS or cash!.
I had to make a deal at that time due my car (10 years old Hyundai) was giving me a lot of repair lists. total to fix was $3000 or more to fix transmission issue.

the dealer took my car as a trade for $2700 as is ( was $3000( this was private sale value from KBB, they discounted 300 for dents, broken power windows.. oh boy...) + give all discounts when financed via TFS.

well was win win solution with stressful negotiation. they tried to sell many extra services (as always people said, answer NO clearly)

I was glad, driving my hyundai until almost the last breath that still has trade/resale value. average yearly driven miles: 18K