<prompt> Human: I ask because Ill be needing a car myself in a few months, and obviously would like to avoid paying as much interest as possible.Also, Ill be moving to the US from Canada at the same time, and I have no US credit record... will this complicate things?EDIT: Should probably clarify -- she lives in California, Ill be moving to Washington.Assistant: Not at all typical.I really hate assuming I know more than someone else when its their own situation, but how sure is she of this? If shes paying extra and the interestprincipal are going down as if she wasnt paying extra, thats normal. That just means the dealership is treating them as prepayments vs extra payments towards principal - useful if youre going to go on extended holiday or something wait, do Canadians say holiday or vacation?. And because its more profitable for the lender, this is the default way to handle extra payments.If she makes an extra payment an instructs the lender to apply it to principal, what happens?They could just have a prepayment penalty thats equal to the reduction in interest, but that would be a pretty big challenge to apply sensibly since one extra payment affects all future interest calculations.Human: If she makes an extra payment an instructs the lender to apply it to principal, what happens?Hmm Im not sure... Ill have to ask her. I assumed that would be the default action for any payment made.  <response>: Generally theres a different procedure for applying a payment to principal. Your friend should call their lender and ask if theres a prepayment penalty, and specifically how to make payments to principal. 