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      01-29-2006, 03:33 PM   #1
bsjd00
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If I pay off a financed vehicle early, am I still charged the full interest?

Please bear with me, I'm a professional with technology, but no so much with finances...

I am planning on financing a 330xi over 5 years, as the monthly payments over 5 years are best for me. However, with yearly bonuses, etc. there is a distinct possibility that I would have enough money to pay off the car in 4 or even 3 years.

If I pay off the car early by sending one large payment, am I still charged the full amount of interest as though I had paid the car off in 5 years? Or do I only actually pay interest on the time I was actually borrowing the money?

If I really can pay it off early, it would be nice to save some money on interest as though I had actually done a 3 or 4 year finance from the start.
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      01-29-2006, 03:36 PM   #2
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No. You wont be charged the full interest. It's simple interest so you only pay for what you borrowed, and for the period of time you borrowed it. So basically you wont incur charges for paying it off early AND you dont have to pay off the rest of the interest.
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      01-29-2006, 04:16 PM   #3
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Quote:
Originally Posted by bsjd00
Please bear with me, I'm a professional with technology, but no so much with finances...

I am planning on financing a 330xi over 5 years, as the monthly payments over 5 years are best for me. However, with yearly bonuses, etc. there is a distinct possibility that I would have enough money to pay off the car in 4 or even 3 years.

If I pay off the car early by sending one large payment, am I still charged the full amount of interest as though I had paid the car off in 5 years? Or do I only actually pay interest on the time I was actually borrowing the money?

If I really can pay it off early, it would be nice to save some money on interest as though I had actually done a 3 or 4 year finance from the start.
Hell no...pay it off if you can.
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      01-29-2006, 04:40 PM   #4
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You can go to bankofamerica.com and use their calculator. They show you The Loan Table. The table show you how much interest you will pay each month and acumulated interest as well.
This is a great tool. I'm on the same situation. I was doing some numbers and I was using the table last night. I got to the conclusion that if you payoff before month 25 on a 60 month loan, you will save a big load of money on interest. After month 30 or so it won't work out.
Try at:
http://www.bankofamerica.com/loansan...xt=financenter
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      01-29-2006, 05:43 PM   #5
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You should be able to call your loan company and ask them for a 'Pay Off Balance'. That will be the total amount due of you send them a check in the next few days.
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      01-29-2006, 05:47 PM   #6
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I had a 5 year loan on my 2000 BMW and paid it off in 4 years without any sort of penalty. Just make sure the loan your getting doesn't have a early payoff penalty. Usually loans these days don't. But it never hurts to ask when your getting the loan.
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