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Discussion » Questions » Finance » When buying a car on time, is it legal for them to make you pay the interest first before any principle?

When buying a car on time, is it legal for them to make you pay the interest first before any principle?

Posted - February 26, 2021

Responses


  • 19937
    In general, when you borrow money, a larger portion of your monthly payment goes towards the interest and the smaller amount towards paying down the principal.  If you pay more than your monthly payment, you should indicate that you want that additional money to go towards the principal.
      February 26, 2021 12:00 PM MST
    4

  • 23650

    I'm sorry, no answer here from me --

    I'm still laughing at myself - - when I read your question, I was thinking, "Wait - - I got to the dealer on time to pick up my car, I'm not late."

    Uh, "time" for me to maybe go to bed.
      February 26, 2021 5:52 PM MST
    4

  • 17620
    Yes.  That is called amortization.  This is why it's great to make as many "principal only" payments as you can during the life of the loan.  Each such payment can bring your loan to the end by quite a few payments. 

    https://www.zillow.com/mortgage-calculator/amortization-schedule-calculator/ This post was edited by Thriftymaid at March 13, 2021 4:29 PM MST
      February 26, 2021 6:57 PM MST
    5

  • 34452
    The interest is always paid first.  So much of your payment will be interest and so much will be principal.  The principal amount will be low at first and interest will be high  in the early payments but will slowly switch places as time goes on.

    Thrifty's link above should show it clearly for you. 
      March 13, 2021 2:24 PM MST
    2