# BMW Financial Services Question



## boostedX5SAV (Jan 25, 2012)

Let's say my monthly payment is $500. If I make an extra month's payment and pay $1,000, will the extra payment be applied toward the principal or be applied toward the second months payment?


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## SD ///M4 (Jan 24, 2011)

Any excess payment is applied towards the principal. BMW FS also does things a little bit differently when you pay more than the balance due, it deducts that amount from what is due the next payment. 

In your example, if your monthly payment is $500 and you pay $1,000, you will have no balance due for the next month, although finance charges will continue to accrue.

I decided that this would be really advantageous to someone who has seasonal income, is on a commission that can vary from month to month, or receives a large annual bonus. By paying more when your monthly income is higher you can effectively eliminate or lower future monthly payments when your monthly income is lower.

I could be wrong, but we pay more every month than the regular monthly payment and each month the monthly payment due is less and less. When we've financed from our credit union in the past, even if we paid more than the monthly payment, the monthly payment due was always the same.


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## Norm37 (Jun 28, 2008)

boostedX5SAV said:


> Let's say my monthly payment is $500. If I make an extra month's payment and pay $1,000, will the extra payment be applied toward the principal or be applied toward the second months payment?


My sons was applied toward the principal and worked this way. He set up that the regular monthly payment was automatically deducted from his bank account.

From then on he could sign in to his MY BMW account and make additional payments any day of the month.

The extra payment was charged interest from the date of the last payment. The next regular payment was charged interest on the new balance from the date of the extra payment.

He was paid every two weeks. Sometimes he made two additional payments in the same month. His additional payments ranged in amounts from $200 to $600.

These additional payments all showed up (right away) in the online amortization schedule along with the regular payments.


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## boostedX5SAV (Jan 25, 2012)

SD 335is said:


> Any excess payment is applied towards the principal. BMW FS also does things a little bit differently when you pay more than the balance due, it deducts that amount from what is due the next payment.
> 
> In your example, if your monthly payment is $500 and you pay $1,000, you will have no balance due for the next month, although finance charges will continue to accrue.
> 
> ...


If it deducts the amount I owe next month, I think I would still owe the same amount of interest even if I paid early. I had a Toyota account that did this.



Norm37 said:


> My sons was applied toward the principal and worked this way. He set up that the regular monthly payment was automatically deducted from his bank account.
> 
> From then on he could sign in to his MY BMW account and make additional payments any day of the month.
> 
> ...


Thanks. So that means if I make extra payments, I can pay off the loan early and pay less interest.


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## Norm37 (Jun 28, 2008)

boostedX5SAV said:


> Thanks. So that means if I make extra payments, I can pay off the loan early and pay less interest.


Yes you can! My son paid his off in around a year and a half. He saved quite a bit of interest.

Check out MY BMW on this page.

http://www.bmwusa.com/


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## icuc (Dec 31, 2011)

Try to refinance with lower interest rate where you can save money.

Penfed.com offering lower rate.


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## omgboost (Nov 22, 2011)

icuc said:


> Try to refinance with lower interest rate where you can save money.
> 
> Penfed.com offering lower rate.


I have .9% interest. I don't think I can get a refinance lower than that and I don't mind the total interest that I'm paying now on the loan, however, if I do have extra money lying around, I will pay more to pay less interest. Thanks.


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## hamel7777 (3 mo ago)

SD ///M4 said:


> Any excess payment is applied towards the principal. BMW FS also does things a little bit differently when you pay more than the balance due, it deducts that amount from what is due the next payment. In your example, if your monthly payment is $500 and you pay $1,000, you will have no balance due for the next month, although finance charges will continue to accrue. I decided that this would be really advantageous to someone who has seasonal income, is on a commission that can vary from month to month, or receives a large annual bonus. By paying more when your monthly income is higher you can effectively eliminate or lower future monthly payments when your monthly income is lower. I could be wrong, but we pay more every month than the regular monthly payment and each month the monthly payment due is less and less. When we've financed from our credit union in the past, even if we paid more than the monthly payment, the monthly payment due was always the same.


 You completely contradicted your self.


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## Zeichen311 (Mar 31, 2011)

hamel7777 said:


> You completely contradicted your self.


Congratulations - in the ten years since he posted that, you were the first to notice.


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