toyota financial services

[encity5]

(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:

Thank you for contacting Toyota Financial Services. You may include extra funds for principal with your standard monthly payments, which can be received via phone, mail, or Pay Online. Interest is calculated on your contract using the simple interest method. This means that any funds received in excess of the standard monthly payment, given that there are no late or miscellaneous charges on your account are automatically applied to the principal balance.

As a result of our billing method, the subsequent billing statement will reflect that your account is paid ahead. However, the net result is that extra funds are applied to principal. As long as you continue to remit monthly payments in at least the amount agreed upon in your retail contract, all additional funds are automatically applied to your principal balance regardless of the method in which they are received.

We value your business and look forward to serving your needs in the future. Thank you for visiting us at www.ToyotaFinancial.com.

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?

[YourFearlessLeader]

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

[RandomFRSguy]

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.

[FirestormFRS]

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

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

[HotLava]

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.

[encity5]

Originally Posted by HotLava

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.

[midnightfrolic]

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.

[rawr]

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.

[YourFearlessLeader]

Originally Posted by midnightfrolic

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.

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.

[86 FRS]

Originally Posted by midnightfrolic

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.

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.

[YourFearlessLeader]

Originally Posted by prettyboyice

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.

[SubieNate]

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

[HotLava]

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.

[YourFearlessLeader]

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