car loan issue

I have a loan for a vehicle that I purchase in December of last year. My loan is a 3 year loan. I paid the first payment of 272.00 in January and in Feburary I paid the regular payment and an additional payment of 1700.00 that I asked to put towards the pricipal of the loan and it was. Then next statement I got said I didn't have a payment due until September of this year. In March I made another payment of $200.00 and again asked and wrote on the check and the statement (in both instances) for this payment to be applied to the principal and that one was mostly put towards the pricipal but also some was put towards the intrest and my payment date was pushed out till October. I have made a couple of other payments towards the principal of my loan since then and every time I write on the check and the statement to please apply those payments to the principal and every time more is applied to the intrest then the principal and this last time only $1.48 was applied to the principal of a $200.00 payment. I have been told by someone that they cannot do that and if they weren't going to apply my payments to the pricipal and the check stated please apply to the pricipal then they should have sent the check back to me and said they could not fullfill my request but by cashing it that they agreed to do as I asked. Is that true? I contacted the company and the manager told me that he had no control over how much went to intrest and how much went to the principal, that confused me. I really need help am I being screwed over by this company or are they justified to do this?

"I really need help am I being screwed over by this company or are they justified to do this?"

Depends on the type of loan contract you signed.  Some loans are installment loans with interest accruing on the balance due.  Therefore if you do what you did which is pay extra it reduces the principal and therefore the amount of interest that is paid over the life of the loan is less.

The second type is where no matter how you pay it off you are obligated to pay the entire interest amount for the life of the loan in your case: 3 years.

What does your loan contract say?

shortee4244:

I contacted the company

What kind of "company" are you dealing with on this car loan?  Is it the car dealership's in-house laon company?

Most loans contracts are written to require the interest to be paid first.  It would not matter what you wrote on the check.  What matters is what the loan contract states.  If you want to "beat the system," make a smaller payment on day "A," then two days later write the larger check "apply to pricipal balance." you will still have two days of interest the larger check would get applied to, however, majority of the check would be towards the principal as you intended.

You will need to find out (amorization table) how much interest is being applied (daily) based on the terms of the agreement before writing check "A" before sending it and check "B" so you know how much you want to chip away at the balance. 

you will also need to determine if there is an early payoff penalty (not likely so much anymore).  Hoever, it is something you will want to find out.

shortee4244:

I have been told by someone that they cannot do that

Told by who? Someone who read your loan contract and understood its terms and conditions or someone who didn't?

shortee4244:

am I being screwed over by this company or are they justified to do this?

There's no way to answer that without knowing the terms and conditions of your loan contract.

You are going to have to read it and come back and tell us which type of loan you have (either of the two types outlined by ClydesMom).

When you come back with the answer, also tell us what your original loan balance was before you made any payments and what the interest rate is and I can do some figuring and show you where you are and where you should be.