topic Re: Paying off Daily Simple Interest Loan in Personal Finance

Paying off Daily Simple Interest Loan

Getmycreditback — Thu, 11 Jan 2024 09:27:28 GMT

Last year my car got totaled in a hit and run and I had to take out a loan to get a new one. My credit score was low 500s at the time so I didn't get good favorable offers.

My loan:

APR: 26.95%

Finance Charged: $6983.77

Amount Financed: $8300.00

Total amount after payment: $15283.77

60 payments:

1 payment was $336.12

59 payments: $253.12

Of the $253.12 only $98.16 goes towards

the principle while $155.19 goes towards interest.

I've made 12 payments so far and barely scratched this loan. At the moment of writing this I have $7359.29 left.

If interest builds up daily in a 30 day cycle between payments and I make my payment on time resetting the interest back to 0, would more of my payment goes towards the principle since interest hasn't built up yet?

If I make that $253.12 payment, wait until it clears and immediately do it again, how much of that would go toward the principle?

I'm trying to understand how the daily interest works.

This is the worst loan I have now that's killing me on the payments. I just want the suffering to end. If I need to put my focus on knocking this one out first I will.

I can try to refinance since my credit score is at least 90-100 points higher. Maybe I can get the interest lowered?

I have a 2nd job now to help too.

Re: Paying off Daily Simple Interest Loan

pizzadude — Thu, 11 Jan 2024 16:48:31 GMT

@Getmycreditback wrote:
Last year my car got totaled in a hit and run and I had to take out a loan to get a new one. My credit score was low 500s at the time so I didn't get good favorable offers.

My loan:

APR: 26.95%
Finance Charged: $6983.77
Amount Financed: $8300.00
Total amount after payment: $15283.77

60 payments:
1 payment was $336.12
59 payments: $253.12

Of the $253.12 only $98.16 goes towards
the principle while $155.19 goes towards interest.

I've made 12 payments so far and barely scratched this loan. At the moment of writing this I have $7359.29 left.

If interest builds up daily in a 30 day cycle between payments and I make my payment on time resetting the interest back to 0, would more of my payment goes towards the principle since interest hasn't built up yet?

If I make that $253.12 payment, wait until it clears and immediately do it again, how much of that would go toward the principle?

I'm trying to understand how the daily interest works.

This is the worst loan I have now that's killing me on the payments. I just want the suffering to end. If I need to put my focus on knocking this one out first I will.

I can try to refinance since my credit score is at least 90-100 points higher. Maybe I can get the interest lowered?

I have a 2nd job now to help too.

Yeah I would 100% try to refinance as soon as you can, that 27% APR is going to kill you with interest.

Making additional payments may in some cases just push out your next scheduled payment so check your loan agreement to see what it specifies, or if there's a way for you to submit an extra payment towards principal only.

Re: Paying off Daily Simple Interest Loan

Kforce — Thu, 11 Jan 2024 17:37:42 GMT

@pizzadude wrote:
Yeah I would 100% try to refinance as soon as you can, that 27% APR is going to kill you with interest.

Making additional payments may in some cases just push out your next scheduled payment so check your loan agreement to see what it specifies, or if there's a way for you to submit an extra payment towards principal only.

^^^^ This

Most apply an additional payment towards principal.

However there are many exceptions.

It all is in the fine print of your loan agreement.

Re: Paying off Daily Simple Interest Loan

SouthJamaica — Thu, 11 Jan 2024 18:33:33 GMT

@Getmycreditback wrote:
Last year my car got totaled in a hit and run and I had to take out a loan to get a new one. My credit score was low 500s at the time so I didn't get good favorable offers.

My loan:

APR: 26.95%
Finance Charged: $6983.77
Amount Financed: $8300.00
Total amount after payment: $15283.77

60 payments:
1 payment was $336.12
59 payments: $253.12

Of the $253.12 only $98.16 goes towards
the principle while $155.19 goes towards interest.

I've made 12 payments so far and barely scratched this loan. At the moment of writing this I have $7359.29 left.

If interest builds up daily in a 30 day cycle between payments and I make my payment on time resetting the interest back to 0, would more of my payment goes towards the principle since interest hasn't built up yet?

If I make that $253.12 payment, wait until it clears and immediately do it again, how much of that would go toward the principle?

I'm trying to understand how the daily interest works.

This is the worst loan I have now that's killing me on the payments. I just want the suffering to end. If I need to put my focus on knocking this one out first I will.

I can try to refinance since my credit score is at least 90-100 points higher. Maybe I can get the interest lowered?

I have a 2nd job now to help too.

Yes, refinance with a credit union. Every credit union I know loves to make car loans. And their interest rates are much better than these predators.

Re: Paying off Daily Simple Interest Loan

Kforce — Thu, 11 Jan 2024 19:52:44 GMT

@Getmycreditback wrote:

At the moment of writing this I have $7359.29 left.
See extra payment savings below

If I make that $253.12 payment, wait until it clears and immediately do it again,
how much of that would go toward the principle?
With most loans all of it, if made the same day.
No need for the first to clear if one pushes a payment or sends extra by check.
It is applied when they receive the funds.
I would set up bill-pay service from checking to push extra money when ever I wanted.

I'm trying to understand how the daily interest works.
Math in photo below

Most auto loans use monthly numbers to
calculate term payments, print statements, and
update web base loan numbers.
However interest is usually calculated in the background daily. (not always)
Issuers usually default to one of three common methods for calculating interest rate.
Some institutions use a simple 360 day per year, some 365 and
still others a rate that is even more favorable to the issuer called "365/360"
The issuer picks the rate method, so it is what it is.

The main idea whether it is monthly or daily simple interest :
The more you pay, the earliest you can, the more you save.

I have a 2nd job now to help too.
If you have extra funds to apply to the loan every month, it will
lower the interest you lose and pay down the loan faster.
The larger and sooner the better, however consistent monthly small numbers
also add up quickly.

As @SouthJamaica said.

If you can, get a better loan.

If not, here are some options.

Extra Payment Savings:

Loan: 7359.00 @ 26.95% with Pmt:253.12/mo (Current)
48 months & $4702 interest

Loan: 7359.00 @ 26.95% with Pmt: 300.mo
37 months & $3454 interest

Loan: 7359.00 @ 26.95% with Pmt: 350/mo (Extra 100)
29 months & $2712 interest

Loan: 7359.00 @ 26.95% with Pmt: 400/mo
24 months & $2241 interest

Loan: 7359.00 @ 26.95% with Pmt: 450/mo (Extra 200)
21 months & $1916 interest

Loan: 7359.00 @ 26.95% with Pmt: 500/mo
19 months & $1675 interest

The Math:

I use the rate formula favoring the issuer in this example

with your loan balance, rate and a 30 day month

Re: Paying off Daily Simple Interest Loan

KatzNDawgs — Fri, 12 Jan 2024 05:12:47 GMT

Agree refinance as soon as your are eligible for a better deal. But check your loan fine print, usually you can do a principal-only payment, but may need to call in to have that done. Who is the lender?

Re: Paying off Daily Simple Interest Loan

Shooting-For-800 — Mon, 15 Jan 2024 05:08:01 GMT

Check your paperwork, but any extra payment amount at any time should reduce the amount of nterest you will pay overall whether it pushes back your payment due date or not.

A simple interest loan should be ... simple.

Pay an extra $100 per month and look for refinance options. Both will help tremendously.

Check Cap One for refinance. They are a good lender for things like this.

Re: Paying off Daily Simple Interest Loan

Getmycreditback — Tue, 16 Jan 2024 14:14:52 GMT

The lender is OneMain Financial

Thank you everyone for the replies. I will check with them today to see if I can make principle only payments and if there's any extra fees for paying it off early.

Re: Paying off Daily Simple Interest Loan

Blakedd91 — Wed, 25 Dec 2024 22:27:52 GMT

Did you have any luck dealing with One main financial to make payments towards principal balance only? I'm trying to get out of my One main financial mistake.

Re: Paying off Daily Simple Interest Loan

KatzNDawgs — Thu, 26 Dec 2024 04:38:49 GMT

@Blakedd91 wrote:
Did you have any luck dealing with One main financial to make payments towards principal balance only? I'm trying to get out of my One main financial mistake.

Usually you need to call in to do a principal only payment, and no early payoff penalty. However, it may vary based on state so I would check with the place you went with. They are predatory, so I would payoff and/or refinance ASAP somewhere else with better terms if possible.

Re: Paying off Daily Simple Interest Loan

Blakedd91 — Thu, 26 Dec 2024 04:49:08 GMT

When I called them they said they don't do payments towards principal balance only. When I read the fine print on my statement it says for "Principal Only and Special Handling Payments

If you have a special payment, please send or bring your payment to the branch address listed at the top of the prior page special payments include payoff, deferments, post-dated checks, judgments, bankruptcy and principal-only payments. Principal-only payments are only available for interest-bearing accounts". So if this is the case I will just drive 45 minutes to the closest branch and write them a check for $2k of my principal balance only. I hope this information is helpful for anyone else trying to get out of debt with OneMain financial mistake 🤣.

Re: Paying off Daily Simple Interest Loan

KatzNDawgs — Thu, 26 Dec 2024 15:08:37 GMT

@Blakedd91 wrote:
When I called them they said they don't do payments towards principal balance only. When I read the fine print on my statement it says for "Principal Only and Special Handling Payments
If you have a special payment, please send or bring your payment to the branch address listed at the top of the prior page special payments include payoff, deferments, post-dated checks, judgments, bankruptcy and principal-only payments. Principal-only payments are only available for interest-bearing accounts". So if this is the case I will just drive 45 minutes to the closest branch and write them a check for $2k of my principal balance only. I hope this information is helpful for anyone else trying to get out of debt with OneMain financial mistake 🤣.

Oh ouch! But it says "send" payment, so sounds like a mailed check could work, but *only* to the specific branch on your paperwork. They are about as bad as US Bank for snail mail at your branch, it looks like.

Re: Paying off Daily Simple Interest Loan

Realist — Sun, 29 Dec 2024 04:09:37 GMT

Shop the loan around for a refi. OneMain Financial is a preditory lender, their rates are absurd.

If it's a necessity to do business with them, then that's fine, but only long enough until you can upgrade to something better. Credit unions are going to be much more forgiving, even if they are high for subprime. It'll likely still be much better in rate.

Re: Paying off Daily Simple Interest Loan

Blakedd91 — Sun, 29 Dec 2024 04:26:23 GMT

An update for everyone stuck with OneMain financial. THEY WILL DO principal balance only payments. But you need to have made your monthly payment for that month first then you can do principal balance only payments over the phone with your debit card, or you can send them a check. But if you pay online it won't go to principal balance only. I read the fine print on my statement after seeing $277 of my payments go to interest and only $1.78 towards principal. I have paid back over half my loan in the last few days! If you know anyone stuck with OneMain financial mistake tell them about this because it's helped me get out of the never ending OneMain financial mistake.