
When it comes to making monthly payments on your auto financing, it’s important to know that you may have options beyond paying the fixed amount. Paying extra toward your account can, in the long run, reduce the amount you pay in finance charges over the life of your financing. As Fortune.com1 points out, the dollars you save in finance charges may not be huge, but paying down your account ahead of schedule could help free up money in your budget.
Our experts at Ally Auto have compiled a list of common questions to help you better understand how paying extra toward your Ally Auto account works.
Q: Will you apply my payment only to reduce my outstanding balance of the amount financed?
A: No. We will apply your payment first to any past due amount, then your current payment due, and next toward any fees, late charges, etc. Paying more than your scheduled payment amount (and/or paying sooner than the scheduled due date) will result in more money being applied to reduce the outstanding balance and potentially paying off your account sooner (assuming you do not pay late). It’s important to note that Ally’s standard practice is to apply your extra payments received to future due dates.
Q: How do consumers make payments to only reduce the outstanding balance of the amount financed?
A: We will not apply a payment only to reduce the outstanding balance. Each time we receive a payment, we calculate and collect a finance charge for the period from the date the last payment posted to your account up to the day we receive the next payment. Any extra amount you pay over the amount of your regularly scheduled payment is automatically applied to future payments, assuming the account is current and there are no past due payments, late charges or other unpaid charges owed on your account. Each payment, regardless of the amount, is applied this way automatically, so you can make your payments as usual, including any extra amount you like. Many of our customers find it convenient to enroll in AutoPay on our website, where you can indicate how much you intend to pay each month, and we will apply the payments as we have described.
Q: Will making additional payments on the amount financed change my monthly payment at all?
A: Although paying extra amounts result in your billing statements and account status indicating your next payment is for less than the scheduled amount, or that your next payment may not be due for several months into the future (depending on how much extra money you paid), you may pay the scheduled payment amount, more than the scheduled payment amount or the reduced amount shown in the billing statement or account status. Think of the next amount due shown on the billing statement or account status as a “minimum” — to keep your account current. In other words, we need to receive the amount shown on the billing statement by the due date so that your account remains current. This does not limit you from paying extra whenever you like.
Q: My contract states I can prepay without penalty. Isn’t it a “penalty” when you charge me finance charges?
A: No. You agreed to pay a finance charge when you signed the contract. As your contract shows, the finance charge is the cost of credit to you. By paying an extra amount when you make your payments (and if you are never late), you will pay less than the total finance charge disclosed on your contract and you will pay your account off sooner. There is no penalty charged for paying off your account sooner.
Comment on this article
Comments
Cyndie L. on June 24, 2015 at 1:27pm
How much do I owe remaining on my Jeep. I believe it's under my husbands name. His name is Tim Donohue. Thanks! Cyndie
chris on June 24, 2015 at 3:22pm
I'd like to add an additional $100 each month to my exisiting payment.
Henry W. on June 24, 2015 at 6:25pm
Can't remember how to get into my account. Thinking about trading vehicles.
rob on June 24, 2015 at 8:19pm
So if my monthly payment is $231 and I pay $281 one month ... it would take the additional $50 off my next month ... asking me for $181 ... but I can still pay the 231 if I want
Daryl I. on June 25, 2015 at 1:11am
Please advise me of the amount I would have to pay on a particular date to pay off my loan. What is the total interest paid if I pay off the loan? Also please advise me of my current balance. Tthanks
Jason G. on June 25, 2015 at 7:26am
I would like to reduce the principal balance by paying extra is that possible if your applying extra funds to future payments?
Ally A. on June 25, 2015 at 10:50am
Hi Cyndie, please give us a call at 1-888-925-2559 and a representative can assist you with this.
Ally A. on June 25, 2015 at 10:51am
Hi Chris, please give us a call at 1-888-925-2559 and a representative can assist you with this.
Ally A. on June 25, 2015 at 10:51am
Hi Henry, please give us a call at 1-888-925-2559 and a representative can assist you with this.
Ally A. on June 25, 2015 at 10:51am
Hi Rob, please give us a call at 1-888-925-2559 and a representative can assist you with this.
Ally A. on June 25, 2015 at 10:52am
Hi Daryl, please give us a call at 1-888-925-2559 and a representative can assist you with this.
Ally A. on June 25, 2015 at 10:52am
Hi Jason, please give us a call at 1-888-925-2559 and a representative can assist you with this.
Melissa on July 16, 2015 at 2:28pm
If I pay extra each month, can I have it applied to my principle instead of future payments?
Ally A. on July 17, 2015 at 10:29am
Hi Melissa, please give us a call at 1-888-925-2559 and a customer representative can assist you with this.
Daniel I. on March 25, 2016 at 7:46pm
Just a thought, a lot of these comments could easily be answered with legitamit, straight forward, no double talk, honest answers. I mean half of them would be cleared up if you simply stated, "We do not allow you to pay directly to principle, regardless whether you call or not" or "We do allow payments to principle directly, but in order to do this you must set it up directly with a representative or mail a check with a notice attached" etc. Telling people to call in, where they then get someone who likely doesn't have an answer for them either. Rather than hide policy behind a wall of people that can't help you either, why not simply be transparent and let people know the truth. In my industry, posting stuff like that publicly can reduce support requests by massive amounts. Thus honesty now = less support cost = more profits = not having to mislead people later = maybe actually letting people pay of their loans early like any honest financial institution without compromising your bottom line.
Rick on April 24, 2016 at 4:44pm
Love how they keep saying call. Glad I don't work with ally anymore for my car financial if u can't put money towards your Principal That should tell u something right there(red flag)
Sarah on August 31, 2016 at 2:16am
Just to be clear.. You are not allowed to pay towards your principle? I have not had a good experience with this loan company and this just tops it off.
Ally on September 1, 2016 at 9:19am
Hi Sarah, not what we like to hear! Give us a call at 1-888-925-ALLY (2559) so a team member can discuss your account with you.
Mike on October 14, 2016 at 12:45pm
I just found this page after I sent them an e-mail asking about principal payments. I recently mailed in 2 seperate payments with a letter asking for the money to be applied towards principal. I had no clue they would deduct interest for this. I’m opening up a claim to the NJ Division of Banking and Insurance to find out if this is ok. I went to my local bank today and asked them if their auto loans can have principal payments made towards the account without deducting interest. They said absolutely. So I filled out my app and will be leaving Ally. Wonder what kind of penalty Ally is going to hit me with when I pay the truck off early.
Ally on October 17, 2016 at 9:34am
Hi Mike, please give us a call at 1-888-925-ALLY (2559) so a team member can look into your specific account and discuss your concerns further.
Stacy M. on February 21, 2017 at 12:46am
I would like to pay on my principal after I've paid my regular car payment; how can I do that online?
Ally on February 21, 2017 at 10:09am
Hi Stacy, please give us a call at 1-888-925-ALLY (2559) so a team member can look into your account discuss this with you.
Kerry on March 13, 2017 at 5:08pm
What are the long term benefits of paying more than my monthly payment?
Lisa on March 25, 2017 at 12:03pm
Read the answer to question 2, everyone. You CANNOT apply extra payments to reduce your principal balance until all of the interest for the life of the loan has been paid, even if you note it that way and even if you ask.
Unknown on May 12, 2017 at 10:48am
I owe back payments. What should i do? Do I pay in full? Can I pay in Portions? How does this work
Ally on May 23, 2017 at 9:36am
Hi, please give us a call at 1-888-925-2559 so we can look into your specific account and discuss your options.
Willie J. on August 28, 2017 at 10:53am
If I pay off my car loan early, do I receive the unpaid finance charges?
Anthony on September 22, 2017 at 8:15pm
If paying more than the minimum monthly payment for example? Now my bank is stating I do not need to make a payment for another two months because the amount I sent covers two additional months. Would Daily interest accrue till my next payment two months later? If so wouldn't interest be a lot more??
David D. on December 23, 2017 at 12:30pm
Can I pay half of my bill one week then pay the half another week before the due date as long as it's in full?
Ally on January 3, 2018 at 10:40am
Hi David, please give us a call at 1-888-925-2559, or chat with us online at ally.com, and a customer representative would be happy to look into your specific account and discuss your payment options.
Herbert on February 1, 2018 at 9:19pm
Can you pay off your car at anytime for base pay. ( actual cost)
Antoinette on February 3, 2018 at 6:34pm
Hi, I have a 2015 Kia with an high interest rate. If I put a lump some of money down like for tax time. would it effect my interest rate? Does it stay the same and the money is applied to the principal? How does it work?
Ally on February 21, 2018 at 12:16pm
Hi Antoinette, if you'll give us a call at 1-888-925-2559 or chat with us online at ally.com, a member of our team would be happy to look into your specific account and discuss your options.
Ally on February 22, 2018 at 10:18am
Hi Herbert, you'll need to request a quote to pay off your financed vehicle. From your account details page, select "Request a Quote" from "Manage Account" and follow the directions on the next screen. You should have the option to pay off your vehicle or view and print your quote. Please give us a call at 1-888-925-2559 or chat with us online at ally.com for further assistance.
Nathanial j. on February 25, 2018 at 11:59pm
Auto loan interest is killing us so there should be a law like my principal is10000 finance charge 4000 so if I pay off the principal that's it the loan is paid off
Amy N. on March 24, 2018 at 12:05am
Q: I want to sell my car outright, can I do that and put the $ toward my remaining balance? And then roll over my remaining payments to another loan if I can go through ally?
Ally on March 27, 2018 at 11:48am
Hi Amy, please give us a call at 1-888-925-2559 or chat with us online at ally.com. A member of our team would be happy to look into your specific account and provide further assistance.
melissa a. on April 3, 2018 at 9:59am
do I have a loan there
Alex on April 6, 2018 at 9:02am
If I double the amount of payment in one payment due date will it count for 2 months paid?
Ally on April 9, 2018 at 9:33am
Hi Alex, please give us a call at 1-888-925-2559 or chat with us online at ally.com so a member of our team can look into your specific account and discuss your payment options further.
Natalia on May 31, 2018 at 5:44am
can i do a payment plan for my over milage fees for a finished car lease?
Ally on June 5, 2018 at 9:51am
Hi Natalia, if you'll give us a call at 1-888-925-2559 or chat with us online at ally.com a member of our team would be glad to discuss your account with you.
David T. on July 19, 2018 at 10:47am
If I pay off 10% of my interest before my first payment then pay my regular bill the first month will that reduce my monthly payments? I have a $6, 300 loan I'm only paying $250 in interest and I paid $25 towards the interest before I pay any towards my loan. Please explain how this will affect me and if you can the best way to save money on that $250 interest
Ally on July 23, 2018 at 10:11am
Hi David, if you'll give us a call at 1-888-925-2559 or chat with us online at ally.com, a member of our team would be glad to look into your specific account and discuss further.
Jim on August 13, 2018 at 4:34pm
Why does the finance charge fluctuate up and down as I pay off my auto loan?
Ally on August 15, 2018 at 12:09pm
Hi David, great questions! Please give us a call at 1-888-925-2559 or chat with us online at ally.com so we can discuss your specific account with you.
Janet on September 4, 2018 at 3:26pm
I found your article very interesting. I have been paying extra money on the principal of my auto loan and it does make a difference. This is something I learned from a friend years ago and its the best advice I've ever received and have passed along to my family and friends. My question now is I have now been paying my auto loan one month early each month. Should I be paying the full interest rate or none at all? Some months I'm paying a lot more than others, even when there's the same amount of days between each payment.
Jenee on September 6, 2018 at 3:22pm
quick question. How come when I make larger monthly payments the interest taken out is more?
Ally on September 10, 2018 at 11:30am
Hi Janet, thanks for sharing this feedback - we're glad to hear you found the article to be interesting! If you'll give us a call or chat with us online at ally.com, a member of our team would be glad to look into your specific account further and discuss your options.
Kori on November 8, 2018 at 6:12pm
These comments are cracking me up. I have been curious about this for a while, so I am glad to know.
Sharon on June 27, 2019 at 10:01am
So let me get this straight. I can pay my 75 month contract off in 25 month but I will still pay all of the interest as though I had taken 75 months to pay it. I smell a rat. A lot of lenders do this now. I didn’t know Ally did. This is wrong. Make sure when you enter a contract with a company that they are charging you simple or compound interest. Not pre-calculated or precomputed interest.
Ally on July 3, 2019 at 3:13pm
Hi Sharon, if you’ll send us an email to allycommunity@ally.com with your full name and phone number we’d be happy to have a team member look into this further.
Justin H. on July 18, 2019 at 1:25pm
I recently bought a new car and the new finance company paid off my car. I did make an extra payment to make sure ALLY didn't report me late. I received a letter congratulating me for paying off the car early however no refund? What gives? The new finance company paid off the pay off quote plus any interest. I did call Ally and they lady said 60 days to process refund. Why does it take 60 days to process my refund?
Stefanie on October 17, 2019 at 10:00pm
If you are 31 days late on a car payment but you pay on the 31st day do y’all report to a collection agency for that?
Goran on November 3, 2019 at 11:50pm
Its says 0.86 cents per day finance for each day after Novembee 6 2019
Ally on November 6, 2019 at 3:19pm
Hi Stefanie, if you’ll give us a call at 1-800-545-1960 one of our team members will be more than happy to help answer your questions.
Donna on January 2, 2020 at 8:53pm
omg Don't ever be late with this company, if your a month late, kiss that what you thought would be a car payment good bye, they apply it to finance charges, so your actually paying double the finance charges plus a late charge to boot, company needs to learn ethics
Aaron on January 14, 2020 at 8:15pm
The way you choose to apply higher minimum payments is ridiculous. I want the additional funds to go towards my overall principle, NOT "held in escrow" for the next month's payment. I tried discussing with customer care just now to no avail. She couldn't understand the concept of what I was trying to say. I want to reduce my overall remaining principle with overpayments, so the compounded interest due is reduced faster. Please advise here, how I can make this happen. A representative can not help me over the phone. I have tried.
Ally on January 15, 2020 at 3:41pm
Hi Aaron, if you’ll send us an email to allycommunity@ally.com with your full name and phone number, we’d be happy to have a team member reach out to you directly to discuss.
Jake on April 19, 2020 at 9:27am
“No, YOU signed the contract” .. really ally? That’s how you respond? Well screw you!!
Darryl on August 8, 2020 at 5:50pm
This is crazy i did not know i could not make extra payments on the principle of the loan i will make sure I pass the world about this.
shaun s. on September 1, 2020 at 2:17am
is this a joke i cant get a answer i had set up to take my monthly bill off my checking account card and my previous insurance had messed up and had pulled a payment out after i cancelled the policy so now i got a check back and put the money on a prepaid card and i cant get a answer how to pay the bill so do i just wait for you people too bill me late fees or keep wasting more time i dont have when im supposed to be sleeping for work to pay for this car this is one of the worst services i had ever gone through im 19 with no parental help and trying to learn all this with just the information you give is impossible!!!!!!!!!!!!!!!!
RT on November 27, 2020 at 7:26pm
Wow! I just got an auto loan with this company. I am sick after reading this article and comments. My intent was to pay double or extra to reduce interest and shorten this loan......but this seems like their method won't obtain my goal. I am aggravated!
Ricky on December 17, 2020 at 6:32pm
Let’s say I got extra 5000 and wana pay to my principal can i
Sally on January 15, 2021 at 4:50pm
Basically, you do not allow people to pay towards the principal balance in order to pay the loan off early. You prefer to get your full benefit of the finance charges. How is this good customer service?
LaChel on January 17, 2021 at 8:35pm
In my Ally Loan I can apply a payment to the loan and not a future date so don't you need to update this?
Ally’s P. on February 24, 2021 at 1:00am
DO NOT FINANCE WITH ALLY DO NOT LAST WARNING - DO NOT DO IT. 1) The call center is NO HELP. You will be sent in circles. 2) They will not accurately report your payments to the Credit Bureaus, but if you’re even a day late they RUN to report it. 3) They will not respond to your in the messaging center. 4) No matter how consistent your payments are, or paying above your minimum, they apparently will not apply it to your principal payment (Even when the dealer assured you that you can, and it “is encouraged”) 5) The app is always down for service. It hasn’t worked in months. Making a payment now is an act of Congress and is probably intentional. 6) If your car is damaged, they will send you through an act of Congress to get repairs. And threaten you with repossession if it is “not fixed”. The representatives are very hostile, they will not help you, they do not want to help you, you will benefit nothing, NOTHING from calling. 7) I regret the day I ever signed with
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Kelley on March 8, 2021 at 7:49am
Great, i just got a car financed through this company. After reading this, looks like I'll be refinancing as soon as possible. Holding onto money until a payment is due just so you can charge an interest fee on it. I'm off to warn people.
Roland S. on March 15, 2021 at 11:40pm
What I don't get is how they can take money from me one month and then ask for more the next month. Can't these corporations give us a break?
Bekah on March 16, 2021 at 6:12pm
This should help all those asking..... to see how it worked......I made a one time separate payment and applied it to my principal instead of deduction from my future payment. I paid $100.00....... $26.28 of that they put towards the finance charge. There is no way to avoid the finance charge you agreed to. You cannot apply 100% of the extra or over payment to the principal until ALL of the finance charge is paid for the loan.
James J. on March 18, 2021 at 6:10am
Ally sucks don't understand why I can't pay on a principal they're idiots
George S. on March 19, 2021 at 6:16am
I made a 4000.00 payment two days ago and it was return to my bank I don't know why.
Latonia C. on April 7, 2021 at 4:00am
I’m not understanding this clearly. So are you saying even if my bill is current and I wanted to pay extra I can’t put the extra on just the principle to help pay my account down faster? That it has to cover finance charges and or interest first before any of the extra money can be applied to the principle? If that is the case that defeats the purpose of paying extra to pay off the car early.
Jose R. on April 16, 2021 at 8:35am
Answer to all Questions is (please give us a call at 1-888-925-ALLY (2559) so a team member can look into your account discuss this with you.) This is very concerning! I just got a car 2 weeks ago. You can't pay toward your Principal and any early payments will sit in your bank account then pulled on the due date. Something that normally takes 3-5 days. I paid on 4/9/2021 it is now the 16th and the money is still sitting in my account. Do not use this company! I will get another loan and pay this one off soon!
Smart P. on August 19, 2021 at 11:36am
Everyone is complaining about them asking people to call in with these questions they're asking. They are all asking for adjustments to their payments or loan balances (even on loans that aren't theirs), therefore, these are private matters that shouldn't be answered or discussed on a public FAQ page.
Rachael C. on November 14, 2021 at 3:27am
Ally is THE WORST! Not letting people make principal only payment is just horrible customer service. I am glad I am done with them. One of my children was recently financed through Ally and I told him to refinance as soon as possible because Ally is garbage.
Alex on December 8, 2021 at 10:03am
Very interesting I just had my car repossessed but I gave extra money to cover the next month did that twice and one of my payments is lost " that's what they say " I called in and was told that it doesn't count for next payment so where is is the extra money ??? I read this and it's the opeset of what I was told so way did they take my car ???
Ally on December 8, 2021 at 10:04am
Hi Alex, our team would be happy to discuss this further with you if you’ll give us a call at 1-888-925-2559.
Jackson on January 28, 2022 at 11:25pm
If I decide to pay back a car fully completely. Do I have to pay a fee? Just wondering an will my title come in.
Ally on January 28, 2022 at 11:26pm
Hi Jackson, thanks for reaching out. Please give us a call at 1-888-925-2559 or chat with us online at ally.com, so we can assist further.
Im p. on February 8, 2022 at 12:46pm
Is it ok to make 2/11 payment if I’m paying car off 2/26?
Ally on February 8, 2022 at 12:47pm
Hi, thanks for reaching out. Our team would be happy to help if you’ll give us a call at 1-888-925-2559.