dumb student loans question

[scottsins]

is there any "trick" to paying them off early. IOW, I DID learn that paying extra each month can be difficult, since most/all of them will apply your xtra $$$ to the next month's payment, and then not send a bill at all. then, you get a bill a few months later and you are back on regular schedule. we conquered that by using online bill pay and jsut paying on a given date.


anyhow. i am about to cut a $5K check to one of my loans. not sure yet which one. if it is not enough to cover the payoff amount (it's about half as much as i need), do I need to designate it principal only or something?

what will they do with the $$$. I want to get the most benefit of these early payments. i have a finance degree but have become a dumbass with this ****.

 

[mishatx]

I imagine they'll apply it to your next X payments, then depending on the lender, either not send you a bill for X months, or send you a bill for X months indicating the next payment is due in month X+1.

If you're paying automatically anyway, then you'll just keep paying and pay off the loan sooner. Your last payment will be adjusted to take care of the interest savings.

Your lender might be willing just to flat reduce the principal and keep billing every month for the same amount (so you pay it sooner) or recalculate the payments to keep the same total number of payments (though I doubt that). Give 'em a call.

 

[Bookman]

If you have a good interest rate why would you pay it off early?

 

[EuroHorn]

I do know that I send in an extra amount on my car loan and they always apply the extra to my principle. I never had to tell them they just do it. Can't you just write on the check the extra should go to the loan balance?

 

[William Cannon]

In reply to:

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[SullHorn]

I'm guessing you have some private student loans, scottsins?

I had a few through SallieMae and went to pay them off--you can call them up and get your 10 day payoff from them and they'll note that you aren't making a bunch of monthly payments at once.

As everyone else noted, if it's a Federal loan, let it ride or refi with a low %

 

[scottsins]

these are private loans i am trying to pay off. you suggest calling in for 10 day payoff number, but i am not ready to pay the entire thing off, jsut about 1/2 of what the principal is today.

 

[Stuck_At_Work]

I had a similar problem once... so the next time around I did this:

Write two checks. Make the first check for the exact amount due that month. Make the second check for whatever left over you want applied to the principal. On the memo line write "apply to principal". Additionally, throw in a post it note explaining what you want done. Follow up a few days later by phone.

It is in their best interest to apply the balance to future payments, as opposed to reducing the principal. Just try to be as clear as possible.

 

[Stuck_At_Work]

... and by the way... in my humble opinion, 2008 is a great year to focus on paying off debt... the market looks very shaky and paying off debt is a sure bet.