Some of you may roll your eyes and say 'ohhh Jolie you foolish foolish girl' but I'm going to ask anyways because my knowledge is limited on this.
I have a consolidated loan which comes out of my account the 26th of each month. The payment is just under $600.
Approximately $510 of that payment is principal and the rest is interest.
I have been slamming lump sums on there to bring it down and thus the months I do that, more than $510 comes off when the next scheduled payment comes out. (The interest I am 'saving' I presume?)
Is there a time of the month where it is SMARTER to put down the lump sum? Does it matter? Do I 'save' more interest if I put lump sum money down at the beginning of my month instead of closer to the end of my month?
Advice would be super.
Thankssssssss
Not Much Working Out Monday
3 hours ago
5 comments:
It depends on when your interest is added to your loan.
For my OSAP loan it was calculated daily and added to the total of my loan daily. So it made the most sense for me to put down lump sums as soon as I had them. However if your interest is only added to your loan at the end of the month, then it wouldn't matter when you put down the lump sum as long as you did it before the end of the month.
I second what GMC has to say, totally depends on how they calculate your interest.
I always figured that interest was compounded daily so sooner is better. However Girl Makes Cents comment makes a lot of sense. =)
For student loans, they are required to calculate it daily. Of course, they can apply it when they feel like, and take two weeks to process, like good old Sallie did for me.
Be sure to label the extra, or they might just apply it to the next payment instead of the principal (* eye roll *).
Just send it in and get it out of your life!!!
Thanks guys for the input. I have sent an email to the bank to find out about when interest is applied. I do tag it as 'lump sum' payment, but this has to be done in person anyways so I just tell the teller. Our bank does not have lump sum options available for loans, but it does for mortgages so if I ever hit that point, I will be good to go.
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