Pay off car early?

Question

Someone please explain to me how this works. 

My friend bought a car for around 15000, 20,000 out the door if I remember right. 

At the time she was in a bind. 

Anyhow she really wanted someone newer and better. She also didn't want to have a large car payment just in case she got laid off work. 

Her payment is 360 a month so she is paying $500 on her car. How does that work? 

Answer 1

Pay off the car now sir

Answer 2

She is trying to shorten the term of the loan so she will own it outright sooner. That is a good idea. However, no matter how long she overpays it does not allow her to skip the next payment. 

There is not $5000 worth of extras between the car price and out the door.

Answer 3

WHAT'S SO BAFFLING ABOUT PAYING AN EXTRA $140 A MONTH to pay off the loan early? Assuming it's a 60 month loan, she'll pay it off in roughly 43 months if she adds that much extra every month. Over the life of the loan that will save about $1000 or so in interest. 

Answer 4

If the loan is like the vast majority of loans, the extra $140 is applied to the principal and she will have the car paid off ahead of time.   

Answer 5

When you make your monthly payment on an auto loan, you’re paying both the principle and the interest. Depending on the terms of your loan, you might pay less interest if you pay off early.