Help me make sense of financing
Hi, I'm embarrassed to admit that I'm confused about best way to structure my financing deal, asking for the wisdom of who has done it before here (I am sure many have). I paid cash for my curre...
Forum Discussion
Grit Dog wrote:
And putting the money towards principle doesn't reduce the interest you pay unless you see out the loan. Or refinance to knock down the beginning balance.
If I understand what you are saying, this is not true.
Most loans today are simple interest loans. So paying a large principle payment will surely reduce the overall interest payment over the term of the loan, because you are paying interest on less principle each month.
It will also reduce the term of the loan ( if the lender does not change your payment after the principle pay down ) because with the higher original payment you will be paying more principle and less interest each month due to the extra principle payment.
Two questions to ask the lender. 1- Is this a simple interest loan? 2- Can I pay extra principle payments?
