Fixed loan payment amt decreased?

Discussion in 'Community Discussion' started by dukebound85, Jul 7, 2009.

  1. dukebound85 macrumors P6

    dukebound85

    Joined:
    Jul 17, 2005
    Location:
    5045 feet above sea level
    #1
    So my student loan fixed montly amount has decreased by 10 bucks a month...why?

    i have paid the last two a at like 150% of what is due BUT that can not offset the fixed amount for over 10 years.....even then, why would the fixed payment go down if i did pay more?


    im confused
     
  2. r.j.s Moderator emeritus

    r.j.s

    Joined:
    Mar 7, 2007
    Location:
    Texas
    #2
    You paid extra. So they recompute based on the remaining principal.
     
  3. GoCubsGo macrumors Nehalem

    GoCubsGo

    Joined:
    Feb 19, 2005
    #3
    Are you sure that you have not somehow paid all the interest due so they've adjusted it that way? When you pay principal and interest you eventually pay enough to where more go towards the principal.

    I can view my amo schedule online, can you?
     
  4. dukebound85 thread starter macrumors P6

    dukebound85

    Joined:
    Jul 17, 2005
    Location:
    5045 feet above sea level
    #4
    i just dont get it.

    paying just a little more over 2 months will effectively save me over a thousand dollars over 10 years?

    how does that make buisness sense?

    my interest isnt all paid off
     
  5. GoCubsGo macrumors Nehalem

    GoCubsGo

    Joined:
    Feb 19, 2005
    #5
    I will ask again, can you see the amortization schedule online?
    This may be a question better suited for your loan company.
     
  6. MacDawg macrumors P6

    MacDawg

    Joined:
    Mar 20, 2004
    Location:
    "Between the Hedges"
    #6
    +1 to that

    It is the only way you will get a real answer
    Everything else is just speculation

    Woof, Woof - Dawg [​IMG]
     
  7. dukebound85 thread starter macrumors P6

    dukebound85

    Joined:
    Jul 17, 2005
    Location:
    5045 feet above sea level
    #7
    yea i can see it.

    however, why would it change from when i first began the scedule?

    for instance, i was suppose to pay 180 for 120 months

    now i pay 170 for 112

    why?

    only 2 months have i paid over that min and it was by like 30 bucks over each time, so even less than i initially thought in this post
     
  8. r.j.s Moderator emeritus

    r.j.s

    Joined:
    Mar 7, 2007
    Location:
    Texas
    #8
    Yep.

    It makes sense because you are paying a certain amount in interest over a certain amount of time. If you pay extra towards the original loan amount, you will reduce the amount of time it takes to pay it back, and at the same time reduce the amount of interest you owe.

    When they recompute it, they are trying to get you back on track. By reducing the amount of your payment, you will pay less each month, but for the original length of time. The only way to "win" and save money on interest is to keep paying extra until the loan is completely paid for - regardless of what the payment is.

    My wife and I are paying $1500 per month towards our mortgage when the payment is $1100. At this rate, we will pay it off 10 years early, and save more than $50,000 in interest.
     
  9. dukebound85 thread starter macrumors P6

    dukebound85

    Joined:
    Jul 17, 2005
    Location:
    5045 feet above sea level
    #9
    wow thats sweet. so theoretically, paying that 60 bucks saved me over a grand?

    man thats a good return for my money lol
     
  10. r.j.s Moderator emeritus

    r.j.s

    Joined:
    Mar 7, 2007
    Location:
    Texas
    #10
    Possibly. It will depend on the original loan amount, interest rate, principal paid so far and time and principal remaining.

    You've just discovered the secret to loans. Just beware. Sometimes they will put an early payoff penalty on it to prevent this.
     
  11. MacDawg macrumors P6

    MacDawg

    Joined:
    Mar 20, 2004
    Location:
    "Between the Hedges"
    #11
    It is the magic of compound interest earnings and savings... only in reverse

    I would still contact the loan provider to get clarification
    But yes, paying extra on the principle will decrease the interest you will pay over time and save you money

    Woof, Woof - Dawg [​IMG]
     
  12. Teh Don Ditty macrumors G4

    Teh Don Ditty

    Joined:
    Jan 15, 2007
    Location:
    Maryland
    #12
    This is how it works on all all loans. Unless there is a prepayment penalty.

    If you pay an extra $100 on your mortgage you shave 5 years off the mortgage.

    Anything over the payment amount, the excess will go towards the principal thus decreasing the amount you owe and the payment amount.
     
  13. GoCubsGo macrumors Nehalem

    GoCubsGo

    Joined:
    Feb 19, 2005
    #13
    Yes that is basically it. Without seeing your schedule I can't be certain.
    For me it is that I had 6 loans to one institution, overtime I paid one off so the interest was only applied towards 5 and not 6. My fixed loan payment dropped.
    Unless he signed a PPP addendum there should be no PPP. It's also a student loan where PPPs usually do not exist.
     
  14. dukebound85 thread starter macrumors P6

    dukebound85

    Joined:
    Jul 17, 2005
    Location:
    5045 feet above sea level
    #14
    well im a fan of this

    i need to learn more on finances
     
  15. Teh Don Ditty macrumors G4

    Teh Don Ditty

    Joined:
    Jan 15, 2007
    Location:
    Maryland
    #15
    You and everyone else.

    Basic finance should be taught in high school, but that's a different topic for a different thread.
     
  16. GfPQqmcRKUvP macrumors 68040

    GfPQqmcRKUvP

    Joined:
    Sep 29, 2005
    Location:
    Terminus
    #16
    Yeah, without a pre-payment penalty you should really try to pay every dollar you can afford every month. It makes more sense to pay off those loans instead of putting it in a savings account (or even in the stock market ATM) if you're concerned with your money in the future. If you have expenses you might need to pay now then you can't do this because you'd have a liquidity problem, but seriously, put a lot towards those loans.
     
  17. Macky-Mac macrumors 68030

    Macky-Mac

    Joined:
    May 18, 2004
    #17
    you might want to check to see if the interest rate on your loan adjusted. My nephew's dropped from 5.9% to 3.9% about 6 months ago and I'm recalling him saying he's had an other adjustment recently
     

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