Of course we all know that banks are in business to make money, but we never really know ALL of the ways they make money off of us, no matter how smart we are.
I just had a very interesting conversation with a client that's in the auto finance dept at Wachovia. The reason I thought this was interesting was because I have read several posts across the internet on auto loans pay status as being reported as currently delinquent when in fact they had been paid and closed. I too had been going back and forth with FMC about a loan that I co-signed on for the lil sis that has been paid off since July 06, but showed currently past due 30 days.
The first reason you should not skip is obviously the extra and "special" interest rate you get charged daily for after your due date. So even though you are not getting a 30 day mark on your credit for being 15 days late, you are paying extra for it, even if they do not implement a late fee.
The most important reason why you shouldn't skip is your pay status will show as delinquent because the banks go by your maturity date. So let's say you have maturity date of July of 08, but you skipped a payment and they added it on at the end of your loan. When you pay that loan off they will show you as being 30 days behind. Why? Because you are 30 days behind your maturity date!
Also, after you have reached and pass your maturity date you are no longer paying the nice little interest that you were paying when you first signed your loan; you are paying a new default interest rate because you are now past the original terms on your contract.
Not all banks practice this, but as mentioned earlier I have seen a number of people ask why are their car loans that are paid and closed being reported as delinquent.
If anyone else have anything to add feel free. This is not something that is etched in stone, this is something that I have been told by a person that works in the auto loan dept at a bank.
Most importantly... MAKE SURE YOU READ YOUR CONTRACT AND PAY ATTENTION TO THE "NEW" TERMS AND CONDITIONS you get in the mail from your nice little auto lender.
Message Edited by jaybee on 05-28-2008 03:09 PM