Correct me if I'm wrong but when it comes to debt, by law, I vaguely remember that any amounts paid must be applied to the interest first before the capital amount.

I think whether it goes to interest or capital doesn't matter though, if there is still an outstanding amount on the loan, interest will be charged to it at a daily rate.

If you owe R500 000 right now and have R250 000, when you pay that in, your outstanding amount will be reduced to R250 000 but interest will be charged against the new outstanding balance.

If you keep paying your monthly payments at the same rate then the term on the loan will reduce meaning you'll be paying it off sooner.

My advice, chuck that amount in AND increase your monthly payments to what you can afford.

The potential interest you would have been charged over the term of the loan will be reduced by the smaller outstanding balance. This combined with your increased monthly payments should drastically decrease the term of the loan allowing you to settle it faster.

@sam: Douche

best method of payment is CASH

On 2016-03-16 10:01:37 new_rubber said:
best method of payment is CASH

That depends on what you're buying, how long you intend to drive the car and how quickly the vehicle depreciates. And also... If you have the cash, won't it be better to invest in another fixed asset that actually appreciates?

Agree with Shy - also remember that tax comes into the equation if you utilize your vehicle for business purposes.

On the argument about early settlement, I can recall that there being some change in legislation that the banks/lending institutions can no longer charge cancellation fees or interest if you want to settle early. I would suggest you check this out. Remember that a car loan is a hire purchase agreement and therefore the outstanding balance includes both interest and capital. The settlement balance should therefore only include the outstanding capital amount owing - no interest!!

On 2016-03-15 19:18:54 DNA said:
@sam: Douche

Really, asking for financial advise on a adult website, that's like going to a fruit shop for a hair cut you might get a shave with a potato peeler, may feel the same but it's not really the same.

Douche my ass