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F.A.Q.'s
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Should I make extra payments against my auto loan, or invest the money instead?
Answer:
Automobile owners in the U.S. have been “programmed” by auto finance companies to accept the tradition of paying their auto loan over 5 or 6 years, and in the process, becoming what we all know as “upside down” or having negative equity. The effect of one extra payment a year can reduce your term by as much as 8 months.
Question:
How does this save interest and reduce the term of my auto loan?
Answer:
The key here is changing from your old habit of paying monthly to making half a payment every two weeks. By doing this, you are making 26 half-payments each year, which means there are two extra half-payments, which occur semi-annually. Our computers track these “extra” payments and forward them to your lender as “principal only” payments. As the interest paid is based on your current principal balance, reducing that balance consistently reduced the interest paid and the term of your loan.
Question:
Why does the Equity Savings Program work so well?
Answer:
By consistently making principal payments on your behalf, the monthly interest payments charged by your lender are reduced at an ever increasing rate, until finally, your automobile is paid off earlier, saving you hundreds of dollars in interest.
Question:
Can’t I make the extra payments myself?
Answer:
Sure you can. However most lenders require either a mailed or faxed letter to them explaining what you want done; or to actually verbally call and tell them where to apply it after you already mailed it. When you make half a payment every two weeks, you don’t feel the extra money that’s being set aside with the program…but you certainly feel the benefits!
Question:
Is there a way to save even more and pay off my auto loan even sooner?
Answer:
Yes! It’s as simple as increasing the amount of your biweekly debit under the Equity Savings Program. Any additional funds you want earmarked to pay off your principal are then added to your regular semi-annual principal payments, reducing your balance and accelerating the payoff of your automobile even further.
Question:
Why doesn’t my lender offer this?
Answer:
There are several reasons:
1. They lose money on a biweekly plan. Lots of it!
2. They are not set-up to handle biweekly payments.
3. Even if you’re lucky enough to be with a lender that does offer a biweekly auto loan, it usually means you have to refinance your existing loan and pay all the related costs involved!
The Equity Savings Program provides a service that most automotive lenders don’t really want to deal with.
Question:
Will this work with adjustable or variable rate mortgages?
Answer:
Yes! Just provide us with the current interest rate you are paying and the current balance of your loan for your ESP analysis.
Question:
What’s the catch?
Answer:
No catch. Just simple arithmetic based on consistency. Although many consumers are aware they can pay down their auto loan, they either don’t pay extra at all or they pay sporadically. SmartNote is a service that provides a consistent method to minimize the amount of interest you pay your lender. It’s a forced savings plan, which provides the discipline most Americans seem to lack.
(For Texas customers only) After first contacting SmartNote, if you still have an unresolved complaint regarding the company’s money transmission or currency exchange activity, please direct your complaints to: Texas Department of Banking, 2601 North Lamar Boulevard, Austin, Texas 78705, 1-877-276-5554 (toll free), www.dob.texas.gov
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