Those of you who love to double and triple your payments for early payoff ((beware))

[BacktoBasics]

Well, if they are paying two days later then there IS two days of interest accrued. But if I send $500 over in a single payment then NONE of that $500 can be interest if the interest is compound interest.

Well sure interest is accrued but the extra amount traditionally was applied to pricipal until the next scheduled payment.

I'm not seeing the monies split up like 490 to pricipal and 10 interests. I didn't do the math but just like all loans they are interest front loaded and all the overage payments seem to be split up as if they are normal scheduled payments. Do you understand what I'm saying.

If my observations are wrong I'll be happy to recant but its not looking normal to me. Especially these people who have paid a 20k loan down to 10 in a years time and their printout sheets look like a normally scheduled payout sheet and you are seeing thousands of dollars not going to principal and being split as if it was a full term loan.

[ShoogarBear]

I'm not claiming to be a finance whiz, but if that's what's going on it sounds pretty sleazy. I also don't see how they could change the terms of the loan in midstream.

The only reason I know it's not happening to me is because Quicken is good at following how much of my payments should be going to principal vs. interests and what should happen if I make an extra payment. The only thing I can suggest to someone who thinks something strange is happening is to compare Quicken's calculations (or that any standard financial calculator) to their loan statements.

[ploto]

I still do not see how they can in any way do this. Now, if I agree to borrow $5000 and pay a $500 set amount for borrowing that money, then I agreed to pay that full $500 no matter how soon I pay it off. But the whole point of regular loans is that interest is only calculated on the current balance at whatever the agreed upon increment is- daily or monthly.

It sounds like they are taking the extra money and applying it proportionately toward the next scheduled payment, but that makes no sense mathematically speaking because no interest is due on that day.

All you need is an amortization schedule with your principal, interest rate, and term.

http://www.bankrate.com/gookeyword/m...calculator.asp

[AnkleBreaker21]

One day...

that day, all you oldies will be long gone. hehehe

[xrayzebra]

I might need some help with this.

I am currently repaying a loan of about $5000.
the min. payments are about $95.
I usually send in about $700 every couple on months and the next due date is pushed back depending on the amount of min. payments met.
But, when it comes time to apply the money to the balance, it goes towards the interest first, then the balance.

Is this correct/normal?

I can't find anywhere in the paperwork that shows an option to do otherwise. There are 2 options:




What can I do and/or What am I doing wrong?

If you belong to a credit union or can join a credit union,
do so, then
take a loan out from them, pay off the other loan.
Credit unions belong to you and add the interest on
each month, therefore if you pay it off early, no interest.
And the amount you are paying interest on is reduce
accordingly. Some credit unions have mortgage loans,
you would need to talk to them about that.

But I have always bought expensive items, I wanted to
pay off over time, by taking a credit union loan out.
Two reasons, much lower interest rates and if payed
off early no penalties.

Some credit unions make it very simple to get a loan,
even to the point now you can just go to a teller and
handle the whole thing with them. Apply on line and
have signature loans. It takes about 15 mins in most
cases to get small loans. Cars not much longer and
you can even handle most of it on the phone and go
in and sign the papers.