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Revisiting old thread
Trying to pay down principal each month with additional payments to myedaccount. But instead of reducing principal, it has advanced my due date so that I am now paid ahead to May. I would prefer to see a straight reduction to principal but is the end result the same - a quicker payoff (assuming I continue to pay extra)? Is the total interest paid the same? No amortization schedule to look at and I pay online so have not sent info requesting specific application directions. I read somewhere that you should make your online payment ONLY on the due date and to make a separate online payment on the same day to clearly track the interest. If not, the daily interest computes and it's not as clear. Again, maybe just a visual thing but I would like to see that the extra $4000 I've paid year to date is coming off the principal and not just paying ahead on interest.
So is this one and the same? Right now, it shows I've only paid $900 down on my loan. Depressing.
Revisiting old thread
Trying to pay down principal each month with additional payments to myedaccount. But instead of reducing principal, it has advanced my due date so that I am now paid ahead to May. I would prefer to see a straight reduction to principal but is the end result the same - a quicker payoff (assuming I continue to pay extra)? Is the total interest paid the same? No amortization schedule to look at and I pay online so have not sent info requesting specific application directions. I read somewhere that you should make your online payment ONLY on the due date and to make a separate online payment on the same day to clearly track the interest. If not, the daily interest computes and it's not as clear. Again, maybe just a visual thing but I would like to see that the extra $4000 I've paid year to date is coming off the principal and not just paying ahead on interest.
So is this one and the same? Right now, it shows I've only paid $900 down on my loan. Depressing.
It definitely won't show you making progress as quickly, but you have to factor in all the end months when you won't have to make any payment, when you otherwise would have. Those count in total savings too. So if your payment is $200/month, and you pay extra and shorten the life of the loan by 10 months, you saved $2000, plus the interest saved by having a lower balance each day when interest is calculated.
Are you sure it isn't going to principal, though? My car loan paid this way also, all my extra payments pushed out the due date further and further, but the balance paid was getting applied first to interest accrued since my last payment, and then all the rest to principal.
So like this: My minimum due was $250. Say $30 went to interest, and the other $220 went to principal. If I instead paid $500 (twice my payment due), it pushed my due date out by a month, but still only $30 went to interest, and the other $470 went to principal. So the entire overage did go to principal. The next month, if I paid $500 again, maybe $28 goes to interest (because the balance due is lower by $470), and the remaining $472 goes to principal. (Note: If I made my $250 payment one day, and $30 went to interest, and then made an extra $250 payment the next day, maybe $1 would go to interest accrued that day)
Look at it this way. On March 1st, I make a $500 payment, of which $30 was interest. On April 1st, I make a $500 payment, of which $28 was interest. But if I had only paid $250 on March 1st, I would still owe interest on April 1st (and in fact, it would be slightly more interest). So advancing your payment due date by a month doesn't mean that something is going to interest. It just means that you won't see the payments applied in any way other than the fact that your outstanding balance is reduced, and your payments will end sooner.
So even though every payment included interest, it wasn't prepaid interest, it was just interest since the last payment. Is that not how yours is being calculated?
If yours is like mine was, then as long as you keep making payments each month, you basically ARE making extra principle payments. If you stop making payments, and skip a few months, then you just were prepaying. But if you do that, then a much larger share of your next payment will go to interest, since more time to accrue interest will have passed. That makes up for the fact that no interest was charged at the time those overpayments were made, so in essence, it prepaid the interest, which would catch up at the time of your next payment.
So the question is WHY don't you think the entire overpayment is going to the principal? Look at your payment split, and calculate how much interest should have accrued since your last payment (balance times interest rate divided by 365 times number of days since last payment [I think]). As long as your payment minus that number equals your balance reduction, the overage is all going to principal AS LONG AS you keep making payments each month.
Thanks Lacerta. I 'think' this is coming out the way I intend, the online statement is just not in depth enough to be obvious. I'll study it with your explanation in mind.
My grandson called his loan company to request that his parents be removed as co-signers of his loan. He had been told that if he had 20 months of on-time payment this would be done. He has made every payment due, in fact he made his payments before they were due. He has made more than one payment a month in order to get the loan paid off faster. When he made his request he was informed that he had made only 2 on time payments. He was told that early payments don't count as 'on time' payments therefore he had not met the criteria for having co-signers removed from his loan. This is CRAZY!
My grandson called his loan company to request that his parents be removed as co-signers of his loan. He had been told that if he had 20 months of on-time payment this would be done. He has made every payment due, in fact he made his payments before they were due. He has made more than one payment a month in order to get the loan paid off faster. When he made his request he was informed that he had made only 2 on time payments. He was told that early payments don't count as 'on time' payments therefore he had not met the criteria for having co-signers removed from his loan. This is CRAZY!
Zero reason really for the lender to remove cosigners on student loan debt. Not surprised it didn't go the way he thought it would
I recently had the student loan company tell me how they were going to apply MY extra payment. They stated since it was a simple interest loan, I would still pay interest first and the remaining would go to my balance.
My grandson called his loan company to request that his parents be removed as co-signers of his loan. He had been told that if he had 20 months of on-time payment this would be done. He has made every payment due, in fact he made his payments before they were due. He has made more than one payment a month in order to get the loan paid off faster. When he made his request he was informed that he had made only 2 on time payments. He was told that early payments don't count as 'on time' payments therefore he had not met the criteria for having co-signers removed from his loan. This is CRAZY!
unless he has it in writing, doesn't matter what he was told, unless he has it recorded.
I recently had the student loan company tell me how they were going to apply MY extra payment. They stated since it was a simple interest loan, I would still pay interest first and the remaining would go to my balance.
What a load of crap.
That's how loans work and many payments are applied that way. The day after your payment period closes more interest is due that day and continues to accrue during that period. If you added it to your normal payment there wouldn't be extra interest accrued
That's how loans work and many payments are applied that way. The day after your payment period closes more interest is due that day and continues to accrue during that period. If you added it to your normal payment there wouldn't be extra interest accrued
I didn't add it to my normal payment, I made it an extra payment, same amount. I was always taught that when paying back loans, if you inform the lender your intentions with an extra payment, they would apply it accordingly. That tends to be a general saying about extra payments and it's very misleading for those who think they're doing one thing while the lenders are doing another.
I didn't add it to my normal payment, I made it an extra payment, same amount. I was always taught that when paying back loans, if you inform the lender your intentions with an extra payment, they would apply it accordingly. That tends to be a general saying about extra payments and it's very misleading for those who think they're doing one thing while the lenders are doing another.
I can't wait to be debt free!
I'm pretty sure you didn't fully read your loan docs as this would have been addressed there. If you added it to your normal payment there shouldn't be new accrued interest at this time. It's not misleading if you are going off of information you've heard instead of the arrangement you agreed to with the lender
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