<p>I'm still trying to wrap my head about paying off my loans. My goal is to make it realistic and manageable (considering ONLY the loan). I had a question that could use answers from others who might have dealt with this. I'm currently in a grace period, planning to take a gap year, and will call my loan provider very soon. But before I make that call, I just want to be informed as much as possible. Discussing it really, really helps me understand.</p>
<p>Let's say, it's only my principle balance. Annual interest included obviously. I read in an old thread that you can pay more than the monthly payment--up to the principle/loan balance. There seems to be a problem that could happen where the loan provider might use my over-payment toward paying interest ahead of time, sometimes making future bills $0. However, I'm not interested in doing that. Should I send a separate check to pay the principle balance?</p>
<p>I want to keep costs low during my gap year, yet if I ever come across more, which I might, I want that to go to the principle, trying to pay the loan off faster.</p>
<p>Any payment will first be applied to accrued interest, then to principal. If you are paying ahead, make sure to note that you want the excess to reduce principal, not to prepay interest.</p>
<p>However, if you do this, make sure you pay fairly steadily. If for example, your interest is $20 per month and your payment is $22, but you have a habit of paying $44 every other month, you may end up with interest accruing in the period which is slightly more than $20 in a month, and then you’ll never pay principal. It’s okay if you pay $20/mo and also pay an extra $10 some months. Just make sure the base payment is equal and the time between payments is as equal (30 day period) as possible.</p>
<p>I’m sorry; I have trouble understanding what you meant in the second paragraph. Sounded like either hypothetical numbers or paying only the minimum. I heard about paying the minimum, which is okay (keeping me from missing a payment) yet really doesn’t make the loan balance grow smaller. Doesn’t the monthly loan payment factor both principle and interest? Otherwise, paying minimum pays the interest only. </p>
<p>Is it too much to ask of the CC community how a minimum is determined? Online calculators set it at $50. I don’t think I qualify for IBR, nor am I interested in seeing a $0 bill. </p>
<p>I’ll definitely ask my lender how to specify principle reduction or prepaid interest.</p>
<p>You are making simple things too complicated. Your lender will provide an amortization schedule for both principal (not principle if that matters) and interest. If you pay more, it will reduce the principal. Remember to make your payments every month and not group payments. Student loans are VERY important and should watched closely. </p>
<p>Keep it simple. Make the required payments on time, and add principal payments only if the interest is the highest you have to pay off. Doubtful! </p>
<p>I really appreciate you telling me like it is, xiggi. I’m allowing myself to be extra super cautious before I take the next step. Other times, I would call (not loan providers) financial counselors, people who know things opposite my interests, and I ask very dumb questions. They’re nice to answer them, of course. One time I made a big, big mistake because I was (subconsciously, I guess) scared to ask for clarification. Something went wrong, and I wish I thought more about that thing beforehand. Reading through some old threads on CC, I read about paying more and the money not going where they wanted it to go. That’s my biggest worry as I don’t want to be careless with my money; I want to know the tricks that will make sure I am in control of my payments, not “lose” money because I didn’t follow an unspecified instruction. Live and learn, right? I’m learning a little first, haha. ;-(</p>
<p>I feel so bad that I want to edit my first posts. I’m learning more, and realizing my plans are changing (for the better), so some of my concerns are old. Anyways, I’m posting a couple QUESTIONS here, hoping to hear some ideas. To finalize my questions for the loan provider.</p>
<p>1) Are standard and extended terms only available for consolidated loans? That would make sense because together they’re larger and would qualify for extended plan, which I’m very interested in. Problem is I only have four different ones, and their due dates are the same–doesn’t sound too necessary from what I read. Or, maybe it’s REQUIRED, given what I’m very interested in. </p>
<p>2) One of my loans has a higher interest rate, so I was thinking to consolidate the other three with a lower interest rate. Generally, does consolidation increase or decrease the interest rate? In my mind, the provider is going to average them out.</p>
<p>generally, a consolidation lowers rates because you “throw in” lower interest rate loans with higher ones.
However, many “money experts” such as Dave Ramsey strongly recommend against consolidation loans.</p>