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Paid more than the minimum, next payment due in 2014?

Frequent Contributor

Paid more than the minimum, next payment due in 2014?

I made a payment on my loan for more than the minimum this month. The system now shows that my next payment is due March 2014. From what I read in a similar thread on here, 2 things can happen here, let me know if this is correct.

 

1) I don't have to make my regularly scheduled monthly payment until March 2014. I will accrue interest during this time though if I don't make any further payments.

 

2) Call the lender and have them change my payment to apply the excess after paying interest to the principal balance. My September payment would be due next month for the agreed to amount. 

 

 

If I choose option #1, how does that affect my credit score? Would the lender simply report every month to the CRA that my account is in good standing even though I don't make a payment for that month, eg, for the month of September? Or do I still have to make the minimum monthly payment as I agreed to with the lender regardless of what I pay every month?

Message 1 of 13
12 REPLIES
Valued Contributor

Re: Paid more than the minimum, next payment due in 2014?

If you pay ahead, your credit report will reflect on-time payments even if you don't pay in the months when no payment is due.  That's because you are still "Paying As Agreed" with the lender.  You can call them and ask for it to be retroactively applied to your principal, but I'm not sure all lenders will do that.  Most of the time, you have to tag the payment as "apply to principal" at the time you submit it, and depending on your lender, that process can be really simple or rather a pain.

 

The real benefit in paying ahead is reducing the interest you pay overall.  In your case, I would make whatever payments I could and ask that any in excess of the minimum due be applied to your principal going forward.  That will help you pay down the loan faster and save money in the long-run.

Message 2 of 13
Frequent Contributor

Re: Paid more than the minimum, next payment due in 2014?

Thanks SCF.

 

So just to be clear, even if I don't make any payments from now until March 2014, I won't be assessed any late payments on my credit report. I guess in other words, while I will accrue interest if I don't make payments, it won't have any negative impact on my FICO or my credit report for missed payments during these months.

Message 3 of 13
Established Contributor

Re: Paid more than the minimum, next payment due in 2014?


money_talks wrote:

Thanks SCF.

 

So just to be clear, even if I don't make any payments from now until March 2014, I won't be assessed any late payments on my credit report. I guess in other words, while I will accrue interest if I don't make payments, it won't have any negative impact on my FICO or my credit report for missed payments during these months.


Payment can't be late unless it is past the next due date. Next due date is in 2014.

Message 4 of 13
Frequent Contributor

Re: Paid more than the minimum, next payment due in 2014?

bahbahd: I guess it's that simple and logical! Thanks!

Message 5 of 13
Valued Contributor

Re: Paid more than the minimum, next payment due in 2014?

but you should keep paying. so you can pay less interest in the end and pay off your debt quicker.
CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
Message 6 of 13
Regular Contributor

Re: Paid more than the minimum, next payment due in 2014?

Keep making the regular payments. It's appealing to push them for a bit, but when you start paying again, you may be paying ONLY the interest that racked up, which is disheartening. The benefit to paying ahead on a loan is lost the second you skip payments because of it.

FICO as of Feb 2017:
EQ 712 | 728 TU | 713 EX
Message 7 of 13
Established Contributor

Re: Paid more than the minimum, next payment due in 2014?

I've paid way ahead and think of it as part of my emergency fund. I do keep paying monthly payments at least. In the future, if I loose my job or something else happens, I've got over a year before I have to figure out how to keep up with student loan payments.

Message 8 of 13
Frequent Contributor

Re: Paid more than the minimum, next payment due in 2014?

Great advice all, thanks!

Message 9 of 13
Frequent Contributor

Re: Paid more than the minimum, next payment due in 2014?

I would recommend that you thoroughly read their Terms of your contract.

 

If it requires you to make monthly payments at a set amount each month, than you are required to do so to keep

from defaulting on your terms even thought you are paid ahead.

 

My daughter had a similar situation and she is paid ahead and wanted to skip a payment. After reviewing her

contract she would be delinquent if she failed to make her monthly payment as required.

 

Don't get yourself caught up on tricky statements that you are paid ahead.

Message 10 of 13