Pre-Pay Payments with Tesla Finance?

[phaheem]

For those who have financed their Teslas directly through Tesla (e.g., not a third-party bank), are you able to pre-pay your monthly payments in advance to skip the ensuing payments until your pre-payment balance is completed?

For example:

• Assume I have a $500/month payment.
• I make a $1,500 payment in January.
• Will I not owe a payment in February and March (because Tesla Finance will deduct it from my $1,500 payment), then resume my regular monthly payment in April?
• Or, will Tesla Finance apply that $1,500 to the principal and still hold you responsible for the monthly payment amount?

 

[jjrandorin]

I havent ever experienced any loan, through any financial institution working like that. Any money paid additional has always gone toward principle. You cant skip monthly payments by sending money in ahead of time.

 

[MP3Mike]

I havent ever experienced any loan, through any financial institution working like that. Any money paid additional has always gone toward principle. You cant skip monthly payments by sending money in ahead of time.

My current mortgage allows me to pre-pay future payments, but not as a lump sum. Any amount I send in is applied to the next due payment, with the excess going towards principal. In fact I have done this, since there was no payment due for the first two months after I refinanced, but I sent payments in every month anyhow. So my next payment is currently due in October.

So in his case, for my mortgage, I would just make three $500 payments in January, one each day and then my next payment would be due in April. (But I have no idea how Tesla would handle it.)

 

[Redhill_qik]

I havent ever experienced any loan, through any financial institution working like that. Any money paid additional has always gone toward principle. You cant skip monthly payments by sending money in ahead of time.

Most loans, especially car loans, default to applying extra money to future payments unless they are explicitly applied to the principle.

@phaheem Pre-paying monthly payments is not a good financial decision, leave it in your bank account and have it auto-withdraw each month.

 

[phaheem]

Most loans, especially car loans, default to applying extra money to future payments unless they are explicitly applied to the principle.

Right. I had a car through Honda Financial and any amount that I overpaid was applied to the next payment, never the principal. So I could “get ahead” on payments by overpaying sometimes.

Just curious if Tesla Financial does this too.

I havent ever experienced any loan, through any financial institution working like that. Any money paid additional has always gone toward principle. You cant skip monthly payments by sending money in ahead of time.

Not necessarily “skip” monthly payments in a literal sense (which is why I italicized skip in my original post), but not having an “amount due” in the month(s) after making an overpayment. Like I said above, I financed a car through Honda Financial that would allow this and just apply overpayments to the next month’s payment.

 

[jjrandorin]

@mswlogo @Redhill_qik thanks both of you. Interesting feedback for me, for sure. For my mortgage I apply some additional principle to it every month, and occasionally send some extra to the impound account I have for it.

I was completely unaware car loans could work that way. both of mine are with my credit union where I have my main accounts, and I just transfer money from my checking account to the loans for my and my wifes car.

Tesla used to not finance anything directly, but I have been reading some people say they have loans with tesla (instead of them farmed out) but not everyone, so its definitely hit or miss.

Anyway, appreciate everyones feedback, I love learning things.

 

[enemji]

Auto loans that I have seen were Total Amount(principle + interest) divided by months = monthly amount. In other words the total amount is fixed. You can pay it earlier but does not change the total amount. Mortgage is a different method.

 

[Not That M3]

I havent ever experienced any loan, through any financial institution working like that. Any money paid additional has always gone toward principle. You cant skip monthly payments by sending money in ahead of time.

I have my single data point that Alliant Credit Union does what the OP asked. I was closing on a mortgage and boosted my score a bit by having my own installment loan below 8.9%. Having it paid off would be a penalty but that’s another topic.

 

[michael805]

I financed through Tesla (US bank)

I accidentally made two payments before my first due date (one auto pay, one that I initiated myself)

My amount on my second statement / due date ended up being $0.

 

[StephanB]

I know this thread is now ancient, but I can confirm that this works with a Tesla originated loan serviced by US Bank as well. I've been making larger payments. Every time I accumulate enough to hit my loan payment amount, my next due date is pushed out one month. My next due date is now March 2023. I have actually used this window to skip a payment one month. It's nice to have the flexibility.