toyota financial services
 

(mods please move this if this is the wrong section to post this)

So i was trying to see how to make a payment towards the princple amount of my frs loan with TFS. (So i can make additional payments towards my full amount supplementing the monthly payments i already make, to help pay off my loan faster and not pay as much interest)
Usually when I overpay the minimum the difference gets applied to my next months payment.

example: say my monthly is $300, and i pay $500 in Jan, my minimun in Feb becomes $100.

anyways so when i look at it like that, the added payment doesnt actually seem to be applying to my principle, thus making me paying the same amount of interest. (unless if i fully pay off my loan early of course)

so i tried emailing them to ask how can i make a payments towards the principle and got this:

Just sounds like all they're saying is, the extra money is going towards principle, we just dont show you that, and you have to trust us. (which i kind of dont)

anyone using TFS has experience with this?

I have used TFS before and what they are saying is accurate. dont worry about it.

Think of it this way, if they are lying to you on paper that leaves them vulnerable to a potential lawsuit. If its an open ended loan ( which it is) Then the agreement says any monies paid over and above the monthly payment go directly to principal.

I wouldn't worry about it too much.

Probably the most trustworthy financing entity you'll ever find.

I'm pretty sure no one amortizes car loans due to the short duration.

You have to call TFS and ask them how to remit a principle payment. The mailing address will be different depending on where you live. They do not tell you this information on the web site because they don't want people paying off principle early. This happened with my last car loan with CitiBank. You had to send the principle payment to some *other* address and state in a letter that you wanted your check applied to the principle balance on account number xx-xxxx, etc.

So just pay your normal monthly amount. Then pay extra whenevery you want once you find out the exact procedure.

this is what i heard when i googled around,
But according to their email, any extra payment above the monthly goes to principle.

that "other" address was what i was hoping to get when I tried asking them. Since it seems others who financed through TFS has done this.

But i guess everyone else is right, that i should trust their word.

essentially what I understand was that the interest is still on the original amount of the car whether you pay more or less per month. over the lifetime of the loan, you're still paying the same amount of interest whether you paid the loan off early or on time.

They just tack on the interest at the get-go and calculate that into your monthly payment estimate.

lets say the car was $25k and interest was $2k. That's $27k total. If you had a 60month loan, you'd divide $27k by 60 months and there's your monthly payment. Whether you pay off the loan in 2yrs or 5 yrs, it's the same total amount of $27k. Unless otherwise stated according to the loan they offered you, that's how I understood it.

From my understanding and when I signed my loan with TFS, the interest is calculated at the agreed APR and they show you a figure of the total amount to be paid after tallying car price, taxes, fees and interest at the end of the loan length. Any amount paid more than your monthly payments will be deducted from the principal and thus the actual amount of interest paid is then diminished.

99% of the time, if this car is paid off in 2 years, you will be paying approx. 50% of the total interest dollars. The interest payment is recalculated every time a bill is sent, and based on the remaining principle. (assuming you send a balloon payment on the 24th month)

Try this, find the payoff amount of the car, and then divide that by however many months you have left to pay off the car, compare this to what youre actually paying, and theres the interest you pay on the car THIS month.

If you do this again in one year, you will notice that the amount of interest you are paying every month is considerably smaller.

correct me if Im wrong. I disagree. If you have 60m or 5years period of loan with a total of $27k including interest, and u paid it in 2-3years, accumulated interest total will be lower. year by year interest goes down because of excessive payment. interest goes down without noticing it.

correct, the interest dollars you pay go down as the principle owed becomes smaller.

I think YourFearlessLeader has it right. The payment stays the same, but the ratio of principal:interest paid per payment goes up as the principal decreases. They just keep the payment the same to make it convenient for you. :)

Nathan

I just called TFS. Get to a customer service REP and ask them how to make a principle ONLY payment. They will give you a special address. You send in your check and on the memo line write your account number and PRINCIPLE ONLY on the memo line.

This is exactly the same thing as overpaying a monthly payment.

If you overpay by three months, do they still send you a statement the next month and bill you for your normal amount? On line people say if you over pay by three months and look at your account on line it will give you a payment due date of three months in the future.

My monthly bill never changed, but the balance due would change. The statement would say the normal monthly payment, and then the amount due. I guess for those who cant hold themselves accountable to a monthly payment after overpaying would benefit from your method.

The real difference seems to be the end result of paying payments ahead versus paying down principle. What does the OP really want, to lower principle and pay every month or 'have a cushion' of pre-paid months? If one has the funds and said funds are dependable, the easier option is just to add on extra payments as YourFearlessLeader has suggested. If the OP wants to build up a buffer in case of hard times and perhaps 'skip' a payment sometime in the future, go with the 'other address, memo on second check' scenario. Either way ends up the essentially the same monetarily, as explained above.

Eric G

TFS is pretty awesome. This is my 2nd time using them. It's great.

Its really not that hard...everytime you make an extra payment, or overpay the bill, that extra money goes to reducing the principal, THUS reducing the interest you pay over the term of the loan. you cant just go pay $500 this month and $100 next month to balance shit out, thats not how loans work

Correct.

Or OP is just responsible with his/her money :scared0016:

No wonder the housing market crashed...


Understand your loans before you sign on the dotted line ;)

LMAO! I was thinkig the same exact thing responding to this thread!!!

Agreed, that is implied in the choices as stated in the your included quote, and I was not judging the choice of the OP in the slightest. I have BTDT with exactly the same decisions about prepaying vs. paying down principle.

Eric G

What i understood and was told differs than what actually is shown to me afterwards. After the response from TFS it looks like what i understood originally is correct. Just that TFS online system does not display it clearly, or at all.

I was just looking for clarification after seeing inconsistencies, not to figure out how my loan works.

Im also sure that not everyone will account for every possible question that might come up in the future when they are signing their loan. Questions / concerns arising afterwards is still possible.

Obviously understanding the critical parts of your loan is crucial before you sign the loan, but how was i to understand that TFS doesnt display overpaying a monthly minimum goes towards the principle?

To my understanding, the way my auto loan worked (with a different bank) was you pay the interest for your 3, 5, 6, however many years up front. so any additional payments i was making over my regular payment were being applied to paying the interest on my 5 year loan....apparently you pay the interest first, then after you've paid all of that off, they will start applying the rest to the principal....but they will collect their money first

so after 2 years of doing that, i called to ask what was going on and was told that and that if i wanted to make a principal payment, i had to call or go in to the bank to have it applied differently, if not i would just keep paying towards that interest.

not sure if it is the same with toyota yet, what i usually do is throw anything extra into another account then every 6 months or so call in a principal payment...haven't had the frs that long yet though...so i'm not sure what the procedure is quite yet.

It's based on a Per Diem. ( you pay interest on the amount you owe that day). That's why u pay more APR up front. Because your loan is the highest obviously at the beginning.

This is not a simple interest loan, it is a rule of 78 loan and should be illegal because it is such a rip off...

http://en.wikipedia.org/wiki/Rule_of_78s


In the United States, the use of the Rule of 78s is prohibited in connection with mortgage refinancings and other consumer loans having a term exceeding 61 months.[1]

On March 15, 2001, in the U.S. 107th Congress, U.S. Rep. John LaFalce (D-NY 29), introduced H.R. 1054,[2] a bill to eliminate the use of the Rule of 78s in credit transactions. The bill was referred to the House Committee on Financial Services on the same day.[3] On April 10, 2001, the bill was referred to the Subcommittee on Financial Institutions and Consumer Credit, where it died with no further action taken.[3]

Maybe I have missed it somewhere in the online portal. Is there a way I can view my activities to-date in the online portal? I just hate them for the fact that you don't know how much you owe them until the next statement......

In TFS website you can get a payoff quote any time. You don't need to wait for the statement.