“Not necessarily. Some lenders set up their car loans so any extra money goes directly to the interest. Therefore, you should signify on your check or online payment that the extra money is for “principal only.”
To err on the side of caution and to create a paper trail, make two payments: one for your monthly car payment and one only for the principal. By doing so, you can sort the payments out for your own records, and you’ll also have documentation if you need to dispute any payments. Also, make sure that your lender doesn’t have prepayment penalties, which can render your idea of extra payments useless. “
