loan pay off question?
mindlesshead asked:
lets say i owe $15k and im payin $600 per month. i want to cut down on the payments and give them just something nominal like $200 every month instead. this way i can save $5k at the end of the year and offer it up as a pay off. sounds logical? i really dont want to go to a debt relief attorney and or file bankruptcy
Allison
lets say i owe $15k and im payin $600 per month. i want to cut down on the payments and give them just something nominal like $200 every month instead. this way i can save $5k at the end of the year and offer it up as a pay off. sounds logical? i really dont want to go to a debt relief attorney and or file bankruptcy
Allison
Tags: Bankruptcy, Debt Relief
July 29th, 2009 at 4:57 pm
Earl
Make the minimum payment required according to their terms, or you will receive late fees.
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July 29th, 2009 at 7:27 pm
Zachary
If your loan agreement is to pay $600 per month, then you can’t just decide to give them less. No, doesn’t sound logical at all.
If you would have the money to save, why wouldn’t you just pay it when you owe it?
And if they DID let you do this, it would almost surely cost you money, since the interest rate on your loan, which would accumulate through the year, is likely more than you could get in interest.
July 30th, 2009 at 11:02 am
Emily
Most loans are made with interest. Assuming the finance company will allow you to cut your payments to $200 per month, the interest will continue to accrue on the loan, and more interest will accrue on your unpaid balance because of it. It is doubtful you would be able to save $5k, and even if you did, the extra interest would take a large bite out of it.
Sorry, it doesn’t sound logical. More logical would be to talk to the loan company, explain your situation, and see if they can work out some kind of plan for you to make smaller payments. If you are paying large interest percentage, this will just extend your pay-off date, and cost you more in the long haul.
August 2nd, 2009 at 1:44 am
Rita
Among other problems, I do not think it is logical to expect them to accept $5k as a payoff if you owe $15K.
August 5th, 2009 at 10:01 am
Shannon
If you have a $15k balance and you pay $200 per month starting January 2009 through December 2009, that would take $1,200 off your 15K debt. Except……………. you will have also accrued interest on that amount as well so your balance would not remain at $15K. If someone owed you 15 grand, would you settle for $5? Pay the thing off like you should. Doing what you are thinking of doing won’t work because it is highly unlikely they will take $5k to pay off $15k or just shy of.
August 7th, 2009 at 6:16 am
Scott
My first suggestion is to make at least the minimum payments each month. My next suggestion is to get a copy of your credit report and score to see if you may qualify for a loan with a lower rate. If not, make minimum payments on all items except that with the highest rate. Whatever you have that has the highest rate, pay however much extra that you can. Once you have paid that item off, start paying down the item with the next highest rate. For example: Item 1 has a minimum payment of $300 with 21% rate and a balance of $10,000, Item 2 has a minimum $150 payment with a 15% rate and a balance of $5,000, and Item 3 has a minimum $200 payment with a 10% rate and a balance of $8,000. You’ve been paying $200 on Item 2 because it has the lowest payment. That’s the wrong approach to take. You want to get the high-interest debt paid off first. So, instead of paying $200 toward Item 2, put that extra $50 toward Item 1 since it has the highest rate. Once Item 1 is paid off, then put that $350 towards paying down Item 2. Once Item 2 is paid off, you’ll have an extra $400 to put toward Item 3.