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· Former '05er
12,590 Posts
Originally posted by starlitewalker@Oct 28 2005, 07:39 PM
but won't i, no matter what, always owe toyota $27000?
No, TFS uses a simple interest method with their loans. Any excess paid will be applied to the principle, and the principle goes down with each payment. So if you could afford to pay more than the monthly, you could pay it off for less and sooner. You don't owe a total of $27000, you owe the principle + interest calculated daily - the payments you make.

And for those who previously said TFS doesn't apply excess payments to your principle, you should check with TFS. I did. They told me the payment is applied to interest, and the balance of the payment is applied to the principle. So, I've doubled my payments to reduce time to payoff and reduce interest paid. It works. The only thing that looks funny is they extend your payment due date so as time goes on, you "Next payment due" will be further and further into the future. All the while, the principle is getting knocked down much faster, and at the end the sum of the interest will be a lot less.
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