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dianakush123

Answer:

Making principal-only payments accelerates the payment of your loan and decreases the interest you pay over the life of the loan. For example, you can save almost $900 in interest by paying an additional principal-only payment of $100 a month on a 60-month loan for $20,000 with a 7% interest rate. You'll also payoff your car loan one year and one month faster with the extra $100 payment.


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The $100 is more reducing from the principal amount every month.

By paying an additional $100 every month, on top of the regular payment will settle the loan faster also the interest amount can be save for some cases.

Why pay extra on car loan principal?

When we pay extra amount on the car loan principal each month, does not decreases the monthly payment but it has other benefits.

The benefits of the extra payment on car loan principal-

  • Principal reduces faster- As by paying the extra amount with monthly payment the principal amount reduces faster than usual.

  • Money saving- The faster the loan finishes the more the money you can save by finishing your loan.

  • Interest saving- Most of the loan finance companies, calculate the interest on the number of month of the loan. As by paying the extra Monty one can reduce the number of month of loan so the interest amount.

Paying an additional $100 every month, on top of the regular payment, towards ones car be beneficial. As the $100 is more reducing from the principal amount every month.

Hence, by paying an additional $100 every month, on top of the regular payment will settle the loan faster also the interest amount can be save for some cases.

Learn more about the benefits of extra payment on loan here;

https://brainly.com/question/25441681

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