My head's going to explode if I don't figure out this loan interest...

Discussion in 'Community Discussion' started by StephenCampbell, Apr 26, 2014.

  1. StephenCampbell, Apr 26, 2014
    Last edited: Apr 26, 2014

    StephenCampbell macrumors 65816

    Joined:
    Sep 21, 2009
    #1
    I'm praying that somebody here can help explain what happened so that I don't have to wait until Monday to talk to the student loan people.

    On Thursday, we submitted payments towards our student loans.

    The next day, Friday, it appeared that a day of interest had accrued, and the payments were still pending.

    The payments have now (Saturday morning) gone through, and the percentage that went to interest reflects the interest as it was on Friday. So, one additional day of interest was factored into the payment, and the amount of principal paid off was reduced by that much.

    But now, each loan shows TWO days of accrued interest sitting there unpaid. All the numbers add up perfectly (in terms of the new principal balances) if you assume that interest simply accrued on Friday, and THEN the payments were applied onto the new balances.

    But how is there now a two day accumulation of interest on all the loans? I'm trying to conceive of the possibilities.

    1. The interest that we saw accrue on Friday was actually Thursday's interest? And so now we're seeing Friday's and Saturday's interest accrued? But if Thursday's interest didn't show up until Friday, why would Saturday's interest be showing up as early as Saturday morning?

    2. There's double interest rates on the weekend?

    3. They just steal an extra day of interest from you whenever you make a sizeable payment because they're mad...?

    I don't get it! Can anybody who has more experience with this kind of thing and student loans shed some light on what may have happened and which interest was from which day?

    Edit: For further clarification, the two-day interest accrued is on the post-payment principal balance of the loans.

    Edit 2: Maybe on Saturday interest for both Saturday and Sunday shows up?
     
  2. alent1234 macrumors 603

    Joined:
    Jun 19, 2009
    #2
    hAS the money come out of your account?
    sometimes it takes 2-3 days to process
     
  3. StephenCampbell thread starter macrumors 65816

    Joined:
    Sep 21, 2009
    #3
    The money actually hasn't come out of my account yet, but it has been applied to the loans. There was, let's say, $10 of interest on Thursday and $11 of interest on Friday.

    The payments are dated Friday, and they include $11 towards interest and the remainder towards principal.

    Now on Saturday, there is $2 of interest sitting there (two days worth).

    Doesn't make sense.
     
  4. mobilehaathi macrumors G3

    mobilehaathi

    Joined:
    Aug 19, 2008
    Location:
    The Anthropocene
    #4
    Bummer man, that's like almost an entire scratch card that you're losing out on.

    You'll just have to wait and call the lender. Don't expect them to be helpful, or care, or know much of anything though. Do you only get interest charged if you're late or something? I'd just sent it in early next time.
     
  5. StephenCampbell thread starter macrumors 65816

    Joined:
    Sep 21, 2009
    #5
    Interest accrues every day. At the current interest rate and loan amount, the daily interest accrued is around $7.

    New interest showed up on Friday, then the payments were applied (the amount going to interest is exactly the same as the amount of interest that there was after new interest showed up on Friday), and now on Saturday everything is as you would expect it to be except that there is $14.16 of accrued interest, two days worth. Why is there an extra day of interest? I'm really hoping it's just Saturday and Sunday showing up together on Saturday.
     
  6. Prof. macrumors 601

    Prof.

    Joined:
    Aug 17, 2007
    Location:
    Chicago
    #6
    How much total student loan debt do you have? If you don't me asking.
     
  7. StephenCampbell thread starter macrumors 65816

    Joined:
    Sep 21, 2009
    #7
    Well it's my fiancé's loans. And we're going to be paying them off within two years, it's not an unmanageable amount. But having two days worth of interest showing up in one day isn't cool.
     
  8. chown33 macrumors 604

    Joined:
    Aug 9, 2009
    #8
    At the very least, you should be writing up some specific questions to ask on Monday. Or you might learn the answers to some by reading the exact terms of the loan contract.

    The two specific things that come to mind are "closing date" and the exact calculation for when a payment is applied. I don't know the financial term for the latter, but "payment calculation" or "payment application" are things to try. You could also look for a "how interest is calculated" description in your loan terms. "Closing date" might also be "payment date" or "date of payment".


    In general, a payment received on a date is subtracted from the balance due. Then any new calculations are based on that result. New calculations would include the next incremental amount of interest, penalties or fees, etc.

    Also in general, all payments received on the same date are lumped together in one calculation at the end of the day. In general, the calculation is carried out overnight, on the company's mainframes, or maybe farmed out to a contracted clearing house.

    If there's a delay in what date a payment is applied, it will affect the balance due. So another thing you need to find out is exactly what date the payment was applied to the loan. This may or may not be the date you sent the payment in, or authorized it online.
     
  9. turtle777 macrumors 6502a

    Joined:
    Apr 30, 2004
    #9
    It's unfortunate, but chances are, you'll have to spend an insane amount of time and plenty of grey hair to get this fixed.

    Is it worth it for $14.16 ?

    -t
     
  10. StephenCampbell, Apr 26, 2014
    Last edited: Apr 26, 2014

    StephenCampbell thread starter macrumors 65816

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    Sep 21, 2009
    #10
    Well it's not even $14.16, it's half of that.

    I know when the payments were applied because I know how much of the payments went to interest vs. principal, and I know at what point in time the interest was equal to the amount that the payments put towards interest. The answer to both is 4/25/2014.

    The daily interest accrued on the new principal balance would be $7.08. On 4/25 the payments eliminated all interest as well as some principal. On 4/26 there should be one day of accrued interest, but there is two.

    On Thursday there was x amount of interest. On Friday, there was x + $7.57 interest. When our payments went through, the amount that went to interest was x + $7.57. The rest went to principal.

    Do you think maybe every time you reduce the principal they automatically add a day of interest based on the new principal amount?

    So that would mean that we got hit with one day's worth of interest the instant the payment went through, and then we also have Saturday's interest. If it does work that way, I'll have to not make payments as often as I thought I was going to. I was planning on making small payments every day, in order to continuously lower the principal, but maybe they have it set up this way in order to prevent that? Is that a possibility?

    Edit: I don't care about the $7.08, I just want to know how this works.
     
  11. Macky-Mac macrumors 68030

    Macky-Mac

    Joined:
    May 18, 2004
    #11
    How did you submit the payments and what time of day was it? And was that the same day they were due?
     
  12. StephenCampbell, Apr 26, 2014
    Last edited: Apr 26, 2014

    StephenCampbell thread starter macrumors 65816

    Joined:
    Sep 21, 2009
    #12
    There were no payments due before May 3rd.

    The first set of payments was submitted by direct bank transfer in the late afternoon on Thursday.

    One additional payment was submitted via the same means early on Friday.

    Because the last payment was done early on Friday it went through at the same time as all the others, they are all dated 4/25/2014, and they all include interest payments consistent with the total accrued interest as of 4/25/2014 (i.e. the $7.57 interest that showed up on 4/25 was paid off).

    The interest that showed up on Friday was paid off. Now it's Saturday, and there is two days of accrual worth of interest on the loans.
     
  13. StephenCampbell thread starter macrumors 65816

    Joined:
    Sep 21, 2009
    #13
    So far no interest has shown up today...... *Crossing fingers!!*..... hopefully there won't be any and this will mean they just do interest for both weekend days on Saturday morning.
     

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