Paying on personal loan

[Annabe]

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 

[OmarGB9]

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. 

[FireMedic1]

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

[Annabe]

@FireMedic1 

Okay. 

[SlideOrInsert]

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.

[pinkandgrey]

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. 

[Kforce]

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@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

[Annabe]

@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.

[Annabe]

@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. 

[SouthJamaica]

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@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).