Solve an argument - refinancing car loan AFTER making really large payment?

If you're planning to refinance your car loan in a few months (at a MUCH lower interest rate) what is the logic in paying a large chunk of money NOW to the company that holds the high-interest loan at the moment?





Seriously, I'm missing the logic here. Wouldn't it be smarter, if you have a chunk of money (which is equal to three high-interest rate car loan payments) why wouldn't you just make your normal payment for the next few months, refinance at the lower rate and THEN pay the big chunk of money?Solve an argument - refinancing car loan AFTER making really large payment?
Modern car loans from reputable financial institutions should be made with simple interest - you pay a portion of your payment is interest and a portion is principal each month. That being said, EVERY DAY THAT YOU HAVE MONEY BORROWED AT A HIGHER INTEREST RATE, IT IS COSTING YOU MORE INTEREST. Make the large payment on the higher interest loan now and next month you will be paying more toward principal, and the month after that you will be paying more toward principal.





Now when it's time to re-finance, you don't have to take out as large of a loan, which in most cases reduces your loan origination fees and taxes that are often charged, and you continue that smaller loan at a smaller interest rate.Solve an argument - refinancing car loan AFTER making really large payment?
If your loan is half paid for, and have a simple interest loan, you already paid 70% of the interest. No matter what kind of loan you have, you'll pay 70% of it on the first half of the loan. That's how the banks make their money.
Yes because as soon as you refinance, you start paying for the interest first and then the principal.


It does not make any sense to give a huge payment unless you specified it to the principal and even if you did it this way refinancing is not always the best solution. Company always take your money and apply to the interest first.
I think it would be smarter to refinance the higher rate. Then use your large payment after you refinance. Otherwise, you are throwing your money away!!!
Paying the big-extra is better to do BEFORE the refinance. Then it will all go to the principal. Once you do the refinance all your fees are going to be based on the payoff of that balance. Also you will go back into the paying mostly interest phase of your new loan.
As long as you are current on your loan, i would do as you say. once you are into the new loan pay it down if you want or better yet, just double up on your payment if the difference is enough