topic Re: Paying on personal loan in General Credit Topics

Paying on personal loan

Annabe — Sat, 17 Dec 2022 01:25:09 GMT

Hopefully I have this question in the right area.

I have a loan through Lending Club that I have been paying on for about a year. On some months a big portion of my payment goes toward the principle and on other months it's almost even toward both interest and principle...I am trying to figure out when is best time to pay on my loan to where a big portion goes on the principle?

In example, is it best to pay 3 weeks before due due or a week before due date or even just pay it a couple of days before? Or does it even help?

The below charts are from LC website showing my posted payments and how much went toward principle and how much went toward interest...

Thank you in advance for your feedback

Re: Paying on personal loan

OmarGB9 — Fri, 16 Dec 2022 20:37:46 GMT

I'm not sure how exactly it works, but I think a good approach is to pay twice a month if you're able to. I know that works with auto loans and helps cut down on interest.

Re: Paying on personal loan

FireMedic1 — Fri, 16 Dec 2022 20:49:36 GMT

It would help if you placed the loan amount and the APR %.

Re: Paying on personal loan

Annabe — Sat, 17 Dec 2022 01:26:02 GMT

@FireMedic1

Okay.

Re: Paying on personal loan

SlideOrInsert — Sat, 17 Dec 2022 01:27:27 GMT

most loans accrue interest daily, so generally a lower balance from one day to the next will accrue less interest. without the particular terms of your loan, it is hard to be precise. the higher number of days, between payments, the more interest accumulates at the higher balance. although there were some anomolous payments in Jun and Aug.

date	pmt	principal	interest	days diff
11/29/22	223.06	127.93	95.13	34
10/26/22	223.06	135.21	87.85	30
09/26/22	223.06	113.3	109.76	32
08/25/22	223.06	123.79	99.27	6
08/19/22	223.06	reversed	8/25/22	0
08/19/22	305.97	206.7	99.27	34
07/16/22	223.06	146.92	76.44	23
06/23/22	223.06	136.16	86.9	20
06/03/22	305.97	274.93	31.04	11
05/23/22	223.06	113.11	109.95	35
04/18/22	223.06	149.65	73.41	24
03/25/22	223.06	116.44	106.62	31
02/22/22	223.06	154.12	68.94	21
02/01/22	223.06	123.32	99.74	29
01/03/22	223.06	125.43	99.63	--

In example, is it best to pay 3 weeks before due due or a week before due date or even just pay it a couple of days before? Or does it even help?

for example with a loan balance of $1000 @ 19.99% apr with a due date of the 28th:

day	pmt	int	balance	vs.	day	pmt	int	balance
1	0	0.55	1000.55		1	0	0.55	1000.55
2	0	0.55	1001.10		2	0	0.55	1001.10
3	0	0.55	1001.64		3	0	0.55	1001.64
4	0	0.55	1002.19		4	0	0.55	1002.19
5	0	0.55	1002.74		5	0	0.55	1002.74
6	0	0.55	1003.29		6	0	0.55	1003.29
7	-100	0.55	903.84		7	0	0.55	1003.84
8	0	0.50	904.34		8	0	0.55	1004.39
9	0	0.50	904.83		9	0	0.55	1004.94
10	0	0.50	905.33		10	0	0.55	1005.49
11	0	0.50	905.82		11	0	0.55	1006.04
12	0	0.50	906.32		12	0	0.55	1006.59
13	0	0.50	906.81		13	0	0.55	1007.14
14	0	0.50	907.31		14	0	0.55	1007.69
15	0	0.50	907.81		15	0	0.55	1008.25
16	0	0.50	908.30		16	0	0.55	1008.80
17	0	0.50	908.80		17	0	0.55	1009.35
18	0	0.50	909.30		18	0	0.55	1009.90
19	0	0.50	909.80		19	0	0.55	1010.46
20	0	0.50	910.30		20	0	0.55	1011.01
21	0	0.50	910.79		21	0	0.55	1011.56
22	0	0.50	911.29		22	0	0.55	1012.12
23	0	0.50	911.79		23	0	0.55	1012.67
24	0	0.50	912.29		24	0	0.55	1013.23
25	0	0.50	912.79		25	0	0.55	1013.78
26	0	0.50	913.29		26	0	0.56	1014.34
27	0	0.50	913.79		27	0	0.56	1014.89
28	0	0.50	914.29		28	-100	0.56	915.45

	total pmt	total int		diff		total pmt	total int
	-100	14.29		1.16		-100	15.45

making one payment 3 weeks before the due date saves $1.16 interest. in this example the difference is insignificant, but when scaled up it can potentially save a significant interest.

Re: Paying on personal loan

pinkandgrey — Sat, 17 Dec 2022 00:12:45 GMT

The short answer is: it's best to pay as early as possible so there's less time of accruing interest at the higher balance amount.

Re: Paying on personal loan

Kforce — Sat, 17 Dec 2022 18:40:58 GMT

@pinkandgrey wrote:
The short answer is: it's best to pay as early as possible so there's less time of accruing interest at the higher balance amount.

^^^ This

Re: Paying on personal loan

Annabe — Sat, 17 Dec 2022 20:25:21 GMT

@SlideOrInsert

The months of June and August, was a payment error regarding another loan with them. LC kept posting the wrong amount to this account and they had to reverse it.

Thank you for your feedback.

Re: Paying on personal loan

Annabe — Sat, 17 Dec 2022 20:27:53 GMT

@pinkandgrey

Thank you for feedback.

That's what I was kinda thinking that it was probably better to pay it as early as possible. I will start doing that and see what kind of results I get from that.

Re: Paying on personal loan

SouthJamaica — Sat, 17 Dec 2022 22:59:16 GMT

@Annabe wrote:
Hopefully I have this question in the right area.

I have a loan through Lending Club that I have been paying on for about a year. On some months a big portion of my payment goes toward the principle and on other months it's almost even toward both interest and principle...I am trying to figure out when is best time to pay on my loan to where a big portion goes on the principle?

In example, is it best to pay 3 weeks before due due or a week before due date or even just pay it a couple of days before? Or does it even help?

The below charts are from LC website showing my posted payments and how much went toward principle and how much went toward interest...

Thank you in advance for your feedback

The more you pay, the more they'll apply to principal. E.g, when you doubled up on the 19th, they applied all of the 2nd payment to principal. So just pay as much as possible as soon as possible, and that will be the way to accelerate the paying down of the principal (and reduce the amount of interest).

Re: Paying on personal loan

Kforce — Sun, 18 Dec 2022 00:09:03 GMT

@SouthJamaica wrote:
The more you pay, the more they'll apply to principal. E.g, when you doubled up on the 19th, they applied all of the 2nd payment to principal. So just pay as much as possible as soon as possible, and that will be the way to accelerate the paying down of the principal (and reduce the amount of interest).

^^^^^ This

Making extra payments when you can, will save a lot

more than just switching to an early payment date.

By moving your payment date 3 week early,

at most you will save $50 that first month.

Amorizatied over the loan gain another $40.

So $90 from switching payment date.

If early in loan an extra $100 will save the $100

plus another $50 over loan term.

Extra payments are the real key if wanting to save money

and also shorten the loan time.

Pay as much as possible as soon as possible.

Early in the loan the gain from extra payments is more important