If I pay off a financed vehicle early, am I still charged the full interest?

bsjd00 · 01-29-2006, 02:33 PM

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.

BMW F22 · 01-29-2006, 02:36 PM

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.

croaker · 01-29-2006, 03:16 PM

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.

YV1 · 01-29-2006, 03:40 PM

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

SteveMD · 01-29-2006, 04:43 PM

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.

gazi8 · 01-29-2006, 04:47 PM

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.

01-29-2006, 02:33 PM	#1
bsjd00 Lieutenant 38 Rep 407 Posts Drives: e90 Join Date: Dec 2005 Location: U.S. iTrader: (0)	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, 02:36 PM	#2
BMW F22 Major General 3566 Rep 9,788 Posts Drives: ///M235i Join Date: Nov 2005 Location: Bay Area iTrader: (8)	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, 03:40 PM	#4
YV1 Private First Class 9 Rep 138 Posts Drives: 325 354 LCSW ZSP ZPP ZCP Join Date: Nov 2005 Location: Raleigh, NC iTrader: (0) Garage List 2006 325 [0.00] 2006 X6 [0.00] 2000 Saab 9-3 SE [0.00] 2001 GS 650 [0.00]	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 __________________ 325 silver black ZSP ZPP ZCP PDC CA XENON Saab 9-3 SE 2000 C240 1999 sold e36 328 touring 1998 sold e39 540 1997 sold Toyota Supra Turbo 1994 sold Porsche 911 1989 sold
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01-29-2006, 04:43 PM	#5
SteveMD Colonel 196 Rep 2,485 Posts Drives: 2016 F10 535i MSport Join Date: Dec 2005 Location: Raventown! iTrader: (3)	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. __________________ 2006 E90 330i (retired) 2009 E90 335i (retired) 2012 E70 X5 50i M Sport (retired) 2016 F10 535i M Sport
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01-29-2006, 04:47 PM	#6
gazi8 Private 11 Rep 64 Posts Drives: 2000 323i/2006 330i/2016 428i Join Date: Oct 2005 Location: Northern Virginia iTrader: (0)	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.
	Appreciate 0 Quote