Has anyone tried to pay off their Mahindra early?

[walt5500]

Don,
It could be paid off early but you are still paying the same as 3 payments from April to July. 3 x 243.65 = 730.94 so looks like no break on the interest for early pay.

[NuBota]

Just to offer another thought - he may have been referencing the fact that you were making two "bulk" payments.

Over the years I have had many many loans (too many), both secured and unsecured, and never came across one that had a prepayment penalty. However, I have had some that could not handle paritial, extra premium payments. They could/would only apply partial payments to the regular scheduled payments. But if I wanted to pay the remaining principle in full, all at once, I could forgo the remaining interest.

Obviously I don't know in your situation, but that has been my experience

-Eric

[NuBota]

Originally Posted by walt5500

Don,
It could be paid off early but you are still paying the same as 3 payments from April to July. 3 x 243.65 = 730.94 so looks like no break on the interest for early pay.

With only three payments left, it is possible the only amount left on the loan was the principal. Most loans front load the interest in the payments, so the first payments are almost all interest with a little prinicpal, and the last payments are then inverse

[Duffster]

Originally Posted by NuBota

With only three payments left, it is possible the only amount left on the loan was the principal. Most loans front load the interest in the payments, so the first payments are almost all interest with a little prinicpal, and the last payments are then inverse

True but there would still be some interest left.

Not enough to split hairs about though

[bhostasa]

Originally Posted by BigE_

When you send in the extra payment, you need to specify that it is against the principal, and not against a future payment.

See Retail Financing - Agricredit-dll.com

"Term debt instruments can be structured without a prepayment penalty to retire early without restriction."

You need to give them another call.... Find out if you have a prepayment clause. Or take another look at that pile of paperwork you signed (without reading? - ouch!).

I was planning on noting that the extra payment was to be applied to the principal. The customer service person that I spoke to said that they didn't do that. That regardless of where I asked for the $ to be applied, that they were only set up to put it against future payments.

I know that there is no prepayment penalty. The question is whether or not there is a savings in interest repaid or not. It seems that I can send as much as I want to pay off the loan with no amount of the payment going to a penalty but if all the additional $ is going to future payments (including interest) that doesn't make any sense.

[BigE_]

If they only apply the additional money towards "future" payments, then that there is your prepayment penalty. Try calling and talking to someone else.

I know that I was told that for a house loan, they have to apply the additional money to the principal. I don't know if that is a state or federal law, but I'm guessing it is federal.

You need to talk to someone else...

[George2615]

Originally Posted by bhostasa

So there was no real savings in interest repaid for your friend, correct? If that's the case than I'll definitely take BobG_in_VA's advice.

When my friend sent his extra payments he did not specify to them to apply the extra payment directly to the principal so they applied them as future payments with no deduction of interest. I would guess you would need to speak to a manager in the AgriCredit finance department to learn how to prepay early and get a rebate or reduction of interest they are not entitled to by prepayment. I believe that if you want to pay it off, say a year early, they would have to recalculate the remainder of the loan for a buyout figure.

As I said before they would rather you continue making monthly payments through the full term of the loan so they get the most interest.

[Heavyduty]

Originally Posted by George2615

When my friend sent his extra payments he did not specify to them to apply the extra payment directly to the principal so they applied them as future payments with no deduction of interest. I would guess you would need to speak to a manager in the AgriCredit finance department to learn how to prepay early and get a rebate or reduction of interest they are not entitled to by prepayment. I believe that if you want to pay it off, say a year early, they would have to recalculate the remainder of the loan for a buyout figure.

As I said before they would rather you continue making monthly payments through the full term of the loan so they get the most interest.

You need to call and tell them to apply any extra money to the principle. They are in the interest making business, they will ***-ume first that you want to make more early payments.

I had a loan one time and they tried that mess on me a couple of times. I saved up enough $$$ to make a lump sum payoff.

[CurlyDave]

... Most loans front load the interest in the payments, so the first payments are almost all interest with a little principal...

NuBota is exactly right on this and it works seriously to your disadvantage to pay off a loan like this early.

The only time it may make sense to pay this type of a loan early is if you need to remove the payment from your credit report to qualify for a different loan. I once paid off an auto loan about two months early in order to qualify for a better interest rate on some rental property I was buying.

[Drexel]

Just fyi sorta stuff.
Mahindra/Agricredit ran the loan a little differently on me. A new tactic I suppose. It was one of those "24 months, no interest loans. When I looked at the contract I noticed two prices for the tractor. The cash price, which was the lower of the two, and the "no interest price". I did some quick math and figured the no interest price equaled the same as 4.07 interest. My credit union was about a 1/4 percent higher so I went with agricredit (even though I felt Mahindra was being a bit sneaky about the loan). It was shortly after signing the contract and feeling good about the 1/4 percent i'd saved that I realized that if I wanted to pay off the tractor early it would save me nothing since Agricredit was calling it an interest free loan.
I hope I explained that so that it makes sense. Needless to say the money I was going to pay off the tractor with is now in savings.