The outstanding balance on my auto loan is $13,591, however the payoff amount as of today is $13,706. I've made eight payment thus far, and my interest rate is 6.14%. Shouldn't the payoff amount be less than my outstanding balance?|||Actually, believe it or not, it is a GOOD thing that the payoff is higher than the balance! If it were lower it would mean that:
a. You had a precomputed interest loan - which is ALWAYS a bad deal, or,
b. You had credit insurance on your loan - which is ALWAYS a bad deal, or,
c. You had Gap insurance on your loan - which is ALWAYS a bad deal.
The fact that you owe more as a payoff means simply that you have a simple interest loan (ALWAYS the best deal).
Since you cannot pre-pay interest, you do have interest due on your balance since your last date of payment. That interest is added to your principal balance to come up with the payoff.
Hope this helps!!!
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