I want to save on interest. I cannot refinance because I will lose GAP insurance.
GAP insurance is usually only carried for one or two years. What is your interest rate? Will this extra payment leave you short of cash? Maybe pay $500 a month for the next 8 months so that you can be rebuilding your savings at the same time that you are taking the extra out.
When you drive off the lot in a brand new car the value drops (say) $2,000. That is not depreciation. That is the dealer's profit. Then if you total the car shortly thereafter, GAP insurance makes sure you get a new car at the full price you paid, including the dealer profit you paid.
The "lump sum payment on loan" simulation calculates the dollar amount and time saved by making a lump sum payment on a loan. For example, if you have an automobile loan of $10,000 with payments amortized over a five year period, you could use this simulation to calculate how much you would save by making a lump sum payment of $2,000. You will also be able to see what your new amortization schedule will look like for the remaining term of your loan.
I guess, telling them it's a gift is not recommended. re-fi or not, this should save you a lot of interest. A payment of this size MIGHT render gap insurance unnecessary; will you still be upside-down afterwards?
Thanks. It is a good point but I need to cater for any unexpected events like reported accidents in the future.
tell them it is towards the priniciple
