How does a loan rework function?

"My lender got a hold of me for a ""loan rework"" on my auto loan.

To do this, I have to put down a lump sum of $5,000, which only reduced my monthly car note from $320 to $307.

How does a loan rework function? The math doesn't add up."

Answer
“You’re right. Something doesn’t add up if you’re putting $5,000 toward your principal, and your payments are reduced by just $13. It sounds like the loan office is just cutting down your principal, which only cuts down the length of the loan.
This loan rework is more like a refinance with another down payment. You need to inquire with your lender about the new interest rate and the length of the loan as well. Hopefully, they’ll tell you why the payment was barely reduced.”
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Eric Schad
Answered on May 28, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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