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Posted in Auto Loans
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Badlands88

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Principal Payment on car loan - Interest is 1.9% - Extra payment or Principal Payment?
If my interest on car loan is 1.9% does it make more sense to do an extra car payment or pay towards the principal?

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Top Contributor
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At that low and interest rate, it really doesn't matter.  You are paying much of the principal each month so an extra payment likely will help the balance drop even faster.  My car is at 2,62% and I'm working on getting credit cards paid off right now before pustting extra money towards the car. But that balance is dropping pretty fast as is. 

Top Contributor
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It is always best to apply any additional funds the the principal.  You would then be paying less interest on another payment and even more would go to the principal.  A standard loan would be to compute the interest from the last payment, deduct that and the balance goes to principal.  Thus, any extra payment would be on the principal.

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