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That doesn't explain why'd you'd send nearly 3x the outstanding balance
I paid off 1 of my student loans, I checked the next day and had a balance of like $.37 as well from interest the day before I guess. So I can kinda understand sending a little extra to know its done.
I checked my balance today and I'm not sure I understand this. The interest portion of my student loan payments have been jumping all over the place.
My payments used to be $400, I paid off a loan and now its $370. I always make extra payments, but lately my interest amounts seem to be getting higher. Shouldn't they be going down each month if I'm lowering the balance? My rates are fixed.
2/5/17 - $30 payment $14.75 interest
2/24/17 - $370 payment $83.55 interest... so Feb was $400 payments and $98.30 interest
3/1/17 - $39 payment $4.56 interest
3/24/17 - $370 payment $87.75 interest... so March was $409 payments and $92.31 interest
4/3/17 - $100 payment $4.68 interest
4/24/17 - $370 payment $94.14 interest... so April was $470 payments and $98.82 interest
Why did my interest payment go from $98.30 to $92.31 back to $98.82 when the balance has dropped like $1,000. I feel like I'm missing something here.
When you make a payment, it goes first to interest that accumulated since the last payment. Months that have more days in them will result in the next month's payment paying more interest. Months that have fewer days will have more go to principal and less to interest.
So if you pay on the 24th of each month:
Feb's payment will be for 31 days
March's payment will be for only 28 days
April's payment will be for 31 days
May's payment will be for 30 days, so the amount that goes to interest should be somewhere around $95.
That doesn't explain why'd you'd send nearly 3x the outstanding balance
Like i said they receive and post the wire whenever they decide. I sent extra so it can be finished. They were not budging on writing off .47 cents and i didn't feel like going back and forth wiring pennies and cents.
Are you saying student loans compound daily? A mortgage has a daily accrual
On all my (and most) mortgages, regardless of when you paid during the month, the payment is the same and the same amount gets slotted for P&I. This is standard practice but I wouldn't be surprised if some were calculated on a simple interest basis, but it's certainly not the norm.
I'm not 100% as it's been a while since I dealt with it but with student loans it's a bit different, the interest is accrued daily and depending on when you pay in the month, more will go towards the principal if paid earlier than your 30 day period. Essentially you are paying $X amount but since the interest is less, more will go toward the principal.
It's also possible if you pay after your due date, that your payment won't be enough to cover the additional accrued interest and you could be behind in payments. This is not the case with a standard mortgage, which is given a grace period before fees are assessed.
Like i said they receive and post the wire whenever they decide. I sent extra so it can be finished. They were not budging on writing off .47 cents and i didn't feel like going back and forth wiring pennies and cents.
You did the right thing. Oftentimes they will quote a payoff amount valid until XX date. You can send that amount and then the extra gets refunded. It's no big deal. They took a while to send our checks too, probably 8 weeks IIRC. Bastards!
Student loans calculate interest daily. Not like a mortgage. Yes it's BS. Also check to make sure principal is decreasing per MLSFan.
yea the number of days between your payments could be the cause. I would also check to make sure you not just prepaying. There should be a button that says principle payment or something like that. If you're prepaying then your next payment date is pushed out and you pay the interest you would have paid. Check your due date that will let you know if you've been prepaying.
yea the number of days between your payments could be the cause. I would also check to make sure you not just prepaying. There should be a button that says principle payment or something like that. If you're prepaying then your next payment date is pushed out and you pay the interest you would have paid. Check your due date that will let you know if you've been prepaying.
If you are making an extra payment outside of your scheduled due date you won't be able to apply it all to princ, a portion of the payment will go towards the interest already accrued since the last payment
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