a little bit of both. i pay extra on my car note everymonth, and it seems like the bank tries to adjust my payments to get the same amount of monthly payments out of me.. im not sure. when started it was 315 a month, its been as high as 320, though i always pay extra, and this past month they only charged 269, i still payed 340. i remember when i was car shopping, a guy told me if you pay like an extra $20 a month on a 5 year finance, you can pay it off a whole year early. id suggest doing something like i do. i try to pay atleast 350 a month though my car note has never been higer then 320, and my car note seems to be charging less and less, so when i pay extra, its that much more towards principal. actually considering intrest is based on what is still owed, and its a percentage every month. id have to assume paying extra would of course pay it off earlyier, and reduce monthly payments becasue intrest is set at like #% of owed. so the less the owed is, id have to assume with some basic math your monthly payment would go down to.