About one month ago, my wife & I had around $4500 saved up and had planned to purchase an xB. We'd already been to the local dealership to test-drive, but had yet to commit to anything. Also, we'd been approved for financing via Toyota with a respectable interest rate.

However, in the span of about 11 days, we were forced to dip into that savings due to a sudden relocation due to work. Now, we can either put the $2000 down that we have remaining or we can wait until we've saved enough to pay the original down payment we had planned on; this would involve a time frame of approximately 2 more months of waiting. The problem is that we are desperately in need of a second vehicle. Our daily driver (1993 Mazda 929) is beginning to show its age & it's only a matter of time before we have to start sinking some money into it as well. The dealer said he could take it on trade for $800 or so, but we actually need the car. I work away from home for weeks at a time, so I only need to make my commute trip (around 2.5 hours) twice: once at the beginning of my hitch and the second trip back home 4 weeks later; I then have 2 weeks off to spend at home with my wife & children. She, however, needs daily transportation to shuttle the kids to & fro, go grocery shopping, etc., etc. So, the idea is that she'd be driving the xB while I'd be taking the 929 to & from work.

The conundrum I face (besides the ones listed above) is that I'd like to know that if there was a month(s) where I could pay above & beyond my monthly payment, that money would be applied toward the balance and not the interest so that eventually, if I was able to do this enough (and I probably would be), my montly payments would end up dropping to an amount near (or even below) what they would've been had I layed down $4500 in the first place. Has anyone here been able to pay up more than their monthly down payment? If so, has it been applied to the balance or the interest?

Thanks in advance.

Usually any amount that you pay over your monthly payment is automatically applied to the principal and not the interest. For example, if your monthly payment is $200 and you pay $250 that month, 50 dollars will go toward your principal, so you'll be paying less interest over the life of the loan, but this shouldn't change your monthly payment unless you re-finance.

I work for a mortgage company, so i know about this kind of stuff, basically if you make pmts above your normal monthly pmt amount, in fact it will go to the principal balance on the loan. This will not change your monthly pmt amount, what this will do is change the date of the expected maturity date of the loan. Like, if you financed for 5 years you could end up paying off the car within 3 or 4 years, it all depends on amount you're sending in & if you make these extra pmts constanly & not whenever you have extra dough. But the other guy was right though, the only way to get a lower amount after you make these pmts is to in fact refi, because when you refi they will take into account your new principal balance with all your extra pmts. Hope this helps you bro.

Does anyone know if toyota financing has a prepay penality for paying out the remaining principal earlier?

I'm in the process of buying a Scion. I think the prepayment issue varies from state to state. I'm in MA and it's illeagal to be charged for prepayment of a loan.

I was told there was no prepayment penalty on my loan. But this is probably determined by your creditworthyness.

no penalties that i know of

here in IL there is no pre-payment penalty. however, i was also told by a TFS rep that any additional payment above the regular monthly sum MUST be submitted to a separate address using a separate check/money order/etc. this amount will therefore be applied specifically toward the principal.
otherwise, the overpayment sent to the same address would be applied to both the principal and interest.

raúl...

Just make sure you get a simple instrest loan, then the interest id fixed thru the life of the loan. Its the interest rule of 78 that really screwed the borrower

I have SouthEast Toyota financing and on my stub it has a spot for applying extra principle. You just tell them where you want it to go and they apply it. The extra principle will shorten the length of the loan nothing will change the payment except refinancing.

Does anyone know if toyota financing has a prepay penality for paying out the remaining principal earlier?

No penalty. I financed my Box w/TFS in early December and paid it off later that month. No penalty. :clap: