Auto loan: must make X payments before payoff
"Paperwork prevails.  What you have is a dealer who get a kickback for sending financing to that institution. And the dealer pretty much said ""We only get paid our kickback at two levels of loan life, 6 and 12 months."" You just didn't quite read between the lines.  This is very similar to the Variable Annuity salespeople who tell their clients, ""The best feature about this product is that the huge commissions I get from the sale fund my kid's college tuition and my own retirement. You, on the other hand, don't really do so well.""  Car salesmen and VA sellers."
"I want to first state that I'm not an attorney and this is not a response that would be considered legal advice.  I'm going to assume this was a loan was made in the USA.  The OP didnt specify.   A typical auto loan has a borrower and a co-borrower or ""cosigner"".  The first signer on the contract is considered the ""primary"".  As to your question about a primary being a co-borrower my answer would be no.  Primary simply means first signer and you can't be a first signer and a co-borrower.  Both borrower and co-borrower, unless the contract specifies different, are equally responsible for the auto loan regardless if you're a borrower or a co-borrower (primary or not primary).     I'm not sure if there was a situation not specified that prompted the question.  Just remember that when you add a co-borrower their positive and negative financials are handled equally as the borrower.  So in some cases a co-borrower can make the loan not qualify.   (I worked for an auto finance company for 16 years)" It sounds like there are no provisions in the loan document for how to proceed in this case.   I would view this as creating a brand new loan. The amount owed is going to be (Principal remaining + interest from 2 years + penalties).  If you created a new loan for 13 years, that would not be how I would expect a lender to behave. I would expect most repayment plans to be something like make double payments until you are caught up or pay an extra $1000 per month until caught up and then resume normal payments. An auto title loans are typically utilized by those that wish to obtain a funding with bad credit rating or no credit in any way. An auto-mobile title lending frequently called a vehicle title lending or merely title funding as well as pink slip funding’s. 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You merely should have a vehicle that is paid off or nearly paid off and also you could make use of the auto title as security to obtain the cash money you require, enabling you to continue driving your vehicle while paying your loan.   Get Auto Car Title Loans Apple Valley CA and nearby cities Provide Car Title Loans, Auto Title Loans, Mobile Home Title Loans, RV/Motor Home Title Loans, Big Rigs Truck Title Loans, Motor Cycle Title Loans, Online Title Loans Near me, Bad Credit Loans, Personal Loans, Quick cash Loans  Contact Us: Get Auto Car Title Loans Apple Valley CA 17868 US Highway 18 # 409, Apple Valley, CA 92307 760-493-2444 autoloans781@gmail.com http://getautotitleloans.com/car-and-auto-title-loans-apple-valley-ca/ "You have figured out most of the answers for yourself and there is not much more that can be said. From a lender's viewpoint,  non-immigrant students applying for car loans are not very good risks because they are going to graduate in a short time (maybe less than the loan duration which is typically three years or more) and thus  may well be leaving the country before  the loan is fully paid off. In your case, the issue is exacerbated  by the fact that your OPT status is due to expire in about one year's time. So the issue is not whether you are a citizen, but whether the lender can be reasonably sure that you will be gainfully employed and able to make the loan  payments until the loan is fully paid off. Yes, lenders care about work history and credt scores but they also care (perhaps even care more) about the prospects for steady employment and ability to make the payments until the loan is paid off.  Yes, you plan on  applying for a H1-B visa but that is still in the future and whether the visa status will be adjusted is still a matter with uncertain outcome. Also, these are not matters that can be explained easily in an on-line application, or in a paper application submitted by mail to a distant bank whose name you obtained from some list of ""lenders who have a reliable track record of extending  auto loans to non-permanent residents."" For this reason, I  suggested in a comment that you consider applying at a credit union,  especially if there is an Employees' Credit Union for those  working for your employer. If you go this route, go talk to a loan officer in person rather than trying to do this on the phone. Similarly, a local bank,and especially one where you currently have an account (hopefully in good standing), is more likely to be willing to work with you.  Failing all this, there is always the auto dealer's own loan offers of financing.  Finally, one possibility that you might  want to consider is whether a one-year lease might work for you instead of an outright purchase, and you can buy a car after your visa issue has been settled." "I'm sorry you are going through this, but what you are dealing with is exactly is how cosigning works.  It is among other reasons why you should never cosign a loan for someone unless you are 100% prepared to pay the loan on their behalf. Unfortunately, the main ""benefit"" to cosigning a loan is to the bank - they don't care who makes payments, only that someone does. It is not in their interest to educate purchasers who can easily get themselves into the situation you are in. What your options are depends a fair bit on the type of loan it is. The biggest problem is that normally as cosigner you cannot force your friend to do anything. If it is for a car, your best bet is to convince them to sell the car and hopefully recoup more than the cost of the loan. Many workplaces have some sort of free service to provide counseling/guidance on this sort of thing. Look into your employee benefits as you may have some free services there. You can sue your friend in small claims court, but keep in mind: It also depends on how big the loan is relative to your income. While it might feel good to sue your friend in small claims court, if it's for $500 it probably isn't worthwhile - but if your friend just stopped paying off their $30k vehicle assuming you will pay for it, even though they can pay for it themselves?" NO, you pay off the Highest interest charging accounts first. The zero interest loan should be the Last one you pay off. Basically payoff your student loan and put the extra money to the car loan You can negotiate a no penalty for early payment loan with dealerships sometimes. Dealerships will often give you a better price on the car when you finance through them vs paying cash, so you negotiate in a 48 month finance, after you've settled on the price THEN you negotiate the no penalty for early payment point. They'll be less likely to try to raise the price after you've already come to an agreement.  My dad has SAID he does this when buying cars, but that could just be hearsay and bravado. Has said he will negotiate on the basis of a long term lease, nail down a price then throw that clause in, then pay the car off in the first payment.  Disclaimer: it's...um not a great way to do business though if you plan to purchase a new car every 2-3 years from the same dealer. Do it once and you'll have a note in their CRM not to either a) offer price reductions for financing or b) offer no penalty early payment financing. Not long after college in my new job I bought a used car with payments, I have never done that since. I just don't like having a car payment. I have bought every car since then with cash. You should never borrow money to buy a car There are several things that come into play when buying a car. When you are shopping with cash you tend to be more conservative with your purchases look at this Study on Credit card purchases.   A Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash.  I would bet you if you had $27,000 dollars cash in your hand you wouldn't buy that car. You'd find a better deal, and or a cheaper car. When you finance it, it just doesn't seem to hurt as bad. Even though it's worse because now you are paying interest.  A new car is just insanity unless you have a high net worth, at least seven figures. Your $27,000 car in 5 years will be worth about $6500. That's like striking a match to $340 dollars a month, you can't afford to lose that much money. Pay Cash If you lose your job, get hurt, or any number of things that can cost you money or reduce your income, it's no problem with a paid for car. They don't repo paid for cars. You have so much more flexibility when you don't have payments. You mention you have 10k in cash, and a $2000 a month positive cash flow. I would find a deal on a 8000 - 9000 car I would not buy from a dealer*. Sell the car you have put that money with the positive cash flow and every other dime you can get at your student loans and any other debt you have, keep renting cheap keep the college lifestyle (broke) until you are completely out of debt. Then I would save for a house.  Finally I would read this Dave Ramsey book, if I would have read this at your age, I would literally be a millionaire by now, I'm 37. *Don't buy from a dealer Find a private sale car that you can get a deal on, pay less than Kelly Blue Book. Pay a little money $50 - 75 to have an automotive technician to check it out for you and get a car fax, to make sure there are no major problems. I have worked in the automotive industry for 20 + years and you rarely get a good deal from a dealer. “Everything popular is wrong.”         Oscar Wilde So, in general, pay to the higher interest rate.  Some contrived reasons you would want to pay your auto  loan more could be: I have had it two way now: I got pre-approval from my credit union which just so happened to be one of the bigger vehicle lenders in the metro area.  What I found out was that the dealership (which was one of the bigger ones in the metro area) had a computer system that looked up my deal with the credit union. Basically, I signed some contracts and the CU and the dealership did whatever paperwork they needed to without me. I bought a used car and drove it off of the lot that night, and I didn't ever go back (for anything financial) Both my wife and her sister received blank checks that were valid up to a certain amount.  In the case of my sister in law, she signed the check, the dealership called to confirm funds and she drove off. In the case of my wife, she ended up negotiating a better deal with dealer finance, but I was assured she only had to sign the check, get it verified and drive the car home. "they apply it to my next payment That's what my bank did with my auto loan.  I got so far ahead that once I was able to skip a payment and use the money I would have sent the bank that month for something else.  Still, though, I kept on paying extra, and eventually it was paid off faster than ""normal"". EDIT:  what does your loan agreement say is supposed to happen to extra payments?" A few years ago I had a 5 year car loan. I wanted to prepay it after 2 years and I asked this question to the lender. I expected a reduction in the interest attached to the car loan since it didn't go the full 5 years. They basically told me I was crazy and the balance owed was the full amount of the 5 year car loan. This sounds like you either got a bad car loan (i.e. pay all the interest first before paying any principal), a crooked lender, or you were misunderstood.  Most consumer loans (both car loans and mortgages) reduce the amount of interest you pay (not the _percentage) as you pay down principal. The amount of interest of each payment is computed by multiplying the balance owed by the periodic interest rate (e.g. if your loan is at 12% annual interest you'll pay 1% of the remaining principal each month). Although that's the most common loan structure, there are others that are more complex and less friendly to the consumer. Typically those are used when credit is an issue and the lender wants to make sure they get as much interest up front as they can, and can recover the principal through a repossession or foreclosure. It sounds like you got a precomputed interest loan.  With these loans, the amount of interest you'd pay if you paid through the life of the loan is computed and added to the principal to get a total loan balance. You are required to pay back that entire amount, regardless of whether you pay early or not. You could still pay it early just to get that monkey off your back, but you may not save any interest.   You are not crazy to think that you should be able to save on interest, though, as that's how normal loans work.   Next time you need to borrow money, make sure you understand the terms of the loan (and if you don't, ask someone else to help you). Or just save up cash and don't borrow money ;) Are there any known laws explicitly allowing or preventing this   behavior? It's not the laws, it's what's in the note - the mortgage contract. I read my mortgage contracts very carefully to ensure that there's no prepayment penalty and that extra funds are applied to the principal. However, it doesn't have to be like that, and in older mortgages - many times it's not like that. Banks don't have to allow things that are not explicitly agreed upon in the contract. To the best of my knowledge there's no law requiring banks to allow what your friend wants. That all makes sense, but all of those things are the responsibility of the cardholder.  If you want to pay off your balance, anything quoted would obviously not include any transaction yet to post.  The problem is a creditor refusing to give the balance AND refusing to take a payment for an amount over the previous statement balance. This is essentially forcing the customer to pay more interest after they declare their intent to pay the full amount.  Good points, but I don't believe those were factors in this case.