Personal Finance | Does paying extra on your car finance make a difference? Yes, it does! | City Press

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Despite what you may have heard, making additional payments to your principal debt does make a difference in reducing the interest that you are liable for in the future. Get more financial advice here:

I have been told that making higher payments towards car finance will not make a difference because I’ll still be liable to pay the initial interest amount agreed upon.This is not correct. There is often confusion around the original quote provided by the bank and what your obligations are.

It is important to note that if a customer makes additional payments on their vehicle loan account, they would need to formally communicate with the bank how the additional payments should be applied to their account – either to reduce their balloon payment , reduce their monthly instalment, or the remaining term of the agreement.

Technically, you are liable for all debt your partner may have incurred, even during the period you were not married. However, if the marriage is not registered with the department of home affairs it would be difficult for a creditor to know that you were married under customary law. This could include a child from another relationship, a parent or even another partner who was financially supported by the deceased member.

The allocation of additional payments in reducing the principal debt is achieved by accruing interest on the advance payments, at the same interest rate applied to the credit agreement. In other words, the advance payment earns the same interest rate that is charged to the principal debt, in order to create an interest offset.

This person sent us their banking details and we made the transfer, not realising we had been duped. We have asked the bank to reverse the transaction immediately, but it says it cannot.All banks adhere strictly to the Payment Association of SA’s regulations. As per these regulations, a bank unfortunately cannot make provision for a dispute resolution process for incorrect transfers between two users.

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