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student loans

Established Contributor

student loans

any good strategies to get them bad down faster than like 10 years I think those are the terms--do any of you pay an extra payment a year--double the payment monthly (and apply xtra to principal) need to come up with some strategies my balance is outrageous and I dont want to have this hinder me for some many years--I pay when I can but when i cant i defer --crazy I know but its what i have to do to prevent it from affecting my credit reports---i am trying to come up with a game plan to start next momth--any suggestions are appreciated it
I want to join the 700 club one day I am getting there Smiley Wink
FICOS 12/17/07 EQ-597 EX-651 and TU-651
FICOS 01/18/07 EQ-594 EX-651 and TU-662 FICOS
04/21/2008 TU-680 EQ-613 EX-688
Message 1 of 5
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New Member

Re: student loans

An alternative option that helps as well is pay biweekly instead of monthly.  Cut your monthly payment in 1/2 and then pay twice instead.
Equifax FICO: 780 (1/8/08)

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Message 2 of 5
Established Contributor

Re: student loans

thanks sounds like a good idea I plan to try this starting February
I want to join the 700 club one day I am getting there Smiley Wink
FICOS 12/17/07 EQ-597 EX-651 and TU-651
FICOS 01/18/07 EQ-594 EX-651 and TU-662 FICOS
04/21/2008 TU-680 EQ-613 EX-688
Message 3 of 5
Regular Contributor

Re: student loans



Pmesritz wrote:
An alternative option that helps as well is pay biweekly instead of monthly.  Cut your monthly payment in 1/2 and then pay twice instead.



Would this effectively pay the loan off faster due to less money having interest counted against it all month? Could this be done with say a car loan as well thats due monthly?  I guess what im asking is if there are any benefits to this other than just paying half every paycheck.
Message 4 of 5
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Regular Contributor

Re: student loans

Or ...  you can pay twice a month and make sure one of those payments is greater than the amount due. Due $200. Payment 1 $200, Payment 2 $100. The best part about it is after a while you will have covered a few payments and depending on the terms of your loan, you may be able to go a few months without paying (I would only do this if I was sure that no payment was due and in case of emergency. interest is still accruing!). Here is the awesome graphic:

Minimum due: $200

Standard:
Payments:          1         2         3         4         5         6         7         8    
Amount: due:    $200  $200   $200   $200   $200    $200   $200   $200
 
Paying $300 a month:
Payments:          1         2         3         4         5         6         7         8    
Amount: due:    $300  $300   $200      ?         ?         ?         ?         ?    
 
By month 2 you've paid  $600 and hence covered the 3rd month payment and your loan company may tell you you can skip it but here is where your terms come in. During the 3rd month you've acrued interest and not paid it. I overpay aoften and have taken advantage of the skip a month deal so I have had two things happen to me.

One, they incerase your payment for the months left over by a bit depending on your interst rate:
Payments:          1         2         3         4         5         6         7         8    
Amount: due:    $300  $300   $200   $205   $205    $205   $205   $205
 
Or, two, they send you a bill for the interest you would have paid had you made a payment:
Payments:          1         2         3         4         5         6         7         8    
Amount: due:    $300  $300    $25    $200   $200    $200   $200   $200
 
Either way, it takes discipline and I don't trust myself at times so another thing that some lenders do which you can ask your lender to do is take the payment off the back hence decreasing the life of your loan BUT you WILL have a payment due the next month. Another plus is if you managed to save $50 bucks in interest (you'll probably save more than this), the last payment which comes a month early wil be that much less:

Payments:          1         2         3         4         5         6         7         8    
Amount: due:    $300  $300   $200   $200   $200   $200   $150   $200
 
I double pay on almost all of my loans and I recommend it if you can afford it. It reduces money wasted in principal while still allowing you to gain credit history.



Message Edited by berraco58 on 01-10-2008 11:38 AM
Message 5 of 5