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New Contributor
moneypenny02
Posts: 83
Registered: ‎04-27-2012

"do not advance due date"

[ Edited ]

When I pay some of my loans, if I pay over the required monthly payment amount, and the total above the required amount is equivalent to another month's payment, it gives me the option to not "advance the due date".  The additional payment gets applied to the next month, so my next due date is pushed back by one month.  I always pick this option because this way, i don't technically have a payment due the next month -- but if I pay it, or pay over again, I can keep pushing the due date of the next required payment further and further. 

 

This worked out well for me b/c when I was between jobs I was able to not make any payments for three months without getting behind on my loan.  I can't imagine why anyone would NOT choose this option, but, since it's not the default option, I am wondering if perhaps I am missing something.  By doing it this way am I "costing" myself something?  If I did advance the due date would that actually lessen the amount of interest that I am paying overall? [Let's assume that I am going to pay the same amount every month regardless of whether it is officially "due" that month.]  What am I missing?

 

 

Contributor
elleng81
Posts: 100
Registered: ‎12-10-2012

Re: "do not advance due date"

I prefer not to advance the due date and just have it applied to the priciple and reduce it. I see where it made sense (or worked out) in your case to advance the payments though.

New Contributor
moneypenny02
Posts: 83
Registered: ‎04-27-2012

Re: "do not advance due date"

[ Edited ]

I actually DID NOT advance the due date -- which is why I was able to go a few months without paying later on.  

 

So, are you saying that if I chose that option the extra that I am paying is not going towards the principal?  

Established Contributor
bahbahd
Posts: 729
Registered: ‎08-12-2011

Re: "do not advance due date"

Doesn't "advance the due date" mean that if you have a payment due, pay two months of payments at one time, then you will be advancing your due date by two months instead of one. Your two month payment moved the next payment due date out by an extra month.

 

New Contributor
moneypenny02
Posts: 83
Registered: ‎04-27-2012

Re: "do not advance due date"

 

bahbahd wrote:

Doesn't "advance the due date" mean that if you have a payment due, pay two months of payments at one time, then you will be advancing your due date by two months instead of one. Your two month payment moved the next payment due date out by an extra month.

 


If i select "Do not advance due date" - then nothing is due the next month.  So if my payment is $300 and i pay $600 in january, I won't have a payment due at all in February.  If I pay $600 in February anyway, then I won't have another payment due until April, and so on.

 

If I don't select anything, the default is that the due date IS advanced -- then I will have the same normal payment due the next month.  So if my payment is $300 and I pay $600 in January, I will still have to pay $300 in February. 

 

I just don't understand how advancing or not advancing the due date affects the principal/interest paid in total -- assuming that I keep paying $600/mo, regardless of whether it is actually due.  

Contributor
JWatson0405
Posts: 93
Registered: ‎10-07-2011

Re: "do not advance due date"

It's "costing" you in the sense that rather than the additional payment being applied solely to principal, you are paying principal+interest a month early. 

 

So, if monthly payment is $300, perhaps $200 of that is towards principal and $100 is towards interest.  If you were to pay $600 and advance the due date, then you are paying $500 towards principal and $100 towards interest but a payment is due the following month; if you don't advance the due date you effectively pay $400 towards principal and $200 towards interest (two months payments), but your payment is pushed out an additional month.


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New Contributor
moneypenny02
Posts: 83
Registered: ‎04-27-2012

Re: "do not advance due date"


JWatson0405 wrote:

It's "costing" you in the sense that rather than the additional payment being applied solely to principal, you are paying principal+interest a month early. 

 

So, if monthly payment is $300, perhaps $200 of that is towards principal and $100 is towards interest.  If you were to pay $600 and advance the due date, then you are paying $500 towards principal and $100 towards interest but a payment is due the following month; if you don't advance the due date you effectively pay $400 towards principal and $200 towards interest (two months payments), but your payment is pushed out an additional month.


So, if I am all paid up on the interest part, then any additional payments would go towards the principal in either case?

Regular Contributor
Travis-84
Posts: 187
Registered: ‎05-07-2010

Re: "do not advance due date"

[ Edited ]

My understanding is that advancing the due date is a great thing.  Any extra payments go towards principal anyway, but if you advance the due date then you have some wiggle room if one month you don't have the money to make a payment. 

 

I just paid off my student loans about a week ago, and my next payment was listed as being due in 2019.  It felt good that I was free to skip a payment if I needed to.  All the money I paid went to principal anyway, so I didn't see any downside to moving the due date further. 

 

Here is my latest student loan billing statement.  On the Jan statement, a payment was due on Feb. 2014.  Since I made a very large payment my new requried payment date was now May 2019, so it moved it back several years.  As you can see, only 12.06 went to interest, and the vast majority went to principal.  Now if I had waited 7 years to make another payment, I would find a lot of interest waiting for me, but if you are responsible, that won't be the case.

 

Also, for me it pushed back the required due date, but autopay still went through.  It didn't bother me, since I had such a low autopay amount towards the end of my payoff.

 

New Contributor
moneypenny02
Posts: 83
Registered: ‎04-27-2012

Re: "do not advance due date"


Travis-84 wrote:

My understanding is that advancing the due date is a great thing.  Any extra payments go towards principal anyway, but if you advance the due date then you have some wiggle room if one month you don't have the money to make a payment. 

 

I just paid off my student loans about a week ago, and my next payment was listed as being due in 2019.  It felt good that I was free to skip a payment if I needed to.  All the money I paid went to principal anyway, so I didn't see any downside to moving the due date further. 


This is exactly the opposite for me.  I get my next mandatory payment date pushed back if I select "DO NOT ADVANCE due date".  If I select "advance due date" then my next payment is due the next month as usual.

Regular Contributor
Travis-84
Posts: 187
Registered: ‎05-07-2010

Re: "do not advance due date"

Interesting.  I didn't have an option to advance or not to advance the date. 

 

Also, I edited my post with new info and a pic.


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