Only if it’s a principal payment, and that’s not realized until the end since your monthly payments won’t change. Does your mortgage company let you make a principal payment and then not make any payments for 3 years without acruing interest?
Well given this thread so far, I suppose the big question is this: If you make a big payment now but don’t pay off the full loan, do you know one way or the other if your final balloon payment is reduced? I would assume your balloon payment would be smaller since you have paid off some of the principal early, but do you know? I’d be interested in the answer to this question as well.
I'm trying to pay off everything including the interest on the whole amount. I'm not trying to avoid anything I owe. I just want to pay part of it upfront so I avoid some interest payments. This is what I was told I could do.
No, you’re not. The entire amount you owe includes the balloon.
I will say if you were told this by the financing guy at the dealership then it may just simply be wrong information. Unfortunately, many of the finance people are not extremely well versed in Ford Options as it is a newer way of financing specific to the Mach-E.
Of course I am. My payment would include the interest that is accrued on that as well for the 36 months. I just wouldn't pay that principal
Then you’re not paying it off. You’re just prepaying.
Exactly
I'm just trying to prepay to save on some interest payments
Yes it would reduce total interest but then your regular scheduled payments (which are a fixed amount every month just like your mortgage until you completely pay it off) would start reducing the principle on the balloon. However, if you walk away from the car in 3 years, I don't think they would give you a check back for the amount you reduced the balloon by. In other words, I don't think Ford isn't guaranteeing to buy back the car at the original balloon amount. Actually I think there is some sort of return/reconditioning fee of like $500 and then they take back the remaining principle on the loan with the car.
Ford Options is a simple interest loan. In this case instead of having 60 monthly payments you have 35 monthly payments and one big one (about 25 payments worth) as a balloon.
No sure why one would assume that they would not have to pay interest when thousands of dollars loaned (balloon pymt) are still outstanding.
I was including the balloon payment in my calculations of the payoff amount because unless you do the loan is not satisfied and there is still interest to pay as the loan is not satisfied. The only way to avoid interest is to pay off the total loan including the balloon payment.
seems like you are trying to say 2+2-1=4
