Ladies and gents, I would like to know what is the best way of paying off the car as quickly as possible. I would like to throw the kitchen sink at this. I have about half the outstanding capital balance in cash. If I transfer, will they knock this against the capital or will they take some portion to the interest. Or should I just wait it out for the duration of the loan or merely increase the monthly payments? Please Advise.

Speak to your bank. Ask them that you want to make a payment and capitalise it to ensure it gets taken off directly from the capital. In addition don't lower your premiums, keep paying the premiums you did before you paid off a portion of the capital, that will decrease the payment term. If you can even pay extra it's worth restructuring the loan (even though they will charge you a restructuring fee) and kill it off even faster. With the interest rates going up it's a great way to save.

Thanks LJ, it's just that when I tried to tell them to decrease the capital, they said I can't do that. The money will go toward the interest and the loan. Dunno if I got someone incompetent or if they would rather I didn't do that

I think the extra paid into the loan goes against the capital- and the interest is recomputed to this new lower outstanding balance...

You will always save in the long run by paying of loans faster (unless u need to show losses for tax purposes)

On 2016-03-14 20:56:52 DNA said:
Thanks LJ, it's just that when I tried to tell them to decrease the capital, they said I can't do that. The money will go toward the interest and the loan. Dunno if I got someone incompetent or if they would rather I didn't do that

Which Bank is that? I've followed this route with MFC and Wesbank before. Make extra payment in the middel of the payment cycle, phone them and TELL them to capitalize said amount. Done.

No, E123, the extra paid is not allocated anywhere, it just sits in the account as a prepaid amount.

Now, my hassle is ensuring that they allocate it correctly. Although, my thinking is that they would rather I didn't do that so they can make interest off me, they are bound to make it difficult for me. I'll harass them some more and see where it ends up.

Got it Mr Shy Guy

If it is a structured loan over 3 years say, then if you pay extra you will be paying the interest over the full term. What you should do is go to the financial institution and ask for a settlement figure and settle that.

You will still have a surcharge to pay for early settlement, basically they put a little Vaseline as opposed to doing it dry!

" I would like to know what is the best way of paying off the car as quickly as possible."

Smash the car, let the insurance pay it off.

LOL that works as well