Comments on: Principal vs. Prepaying, Our Debt Snowball and How Wachovia Stole $8.03 http://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/ Personal Finance for Geeks from the Debt Snowball to Homemade Air Conditioners Sun, 05 Feb 2012 16:55:24 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Software Wizardhttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1910 Software Wizard Fri, 30 Oct 2009 01:32:50 +0000 http://www.fiscalgeek.com/?p=1031#comment-1910 The way it's supposed to work is that the interest is calculated daily (probably) or monthly on the remaining amount. Then, if you make a payment ahead, the remaining amount will be lowered so the interest owed would be lowered. Once the loan is paid off, you are due a rebate check for the early payments. This happened to me with a car loan I paid off about 7 years ago. I haven't had a loan lately, so maybe banks are trickier now than I remember. If this is the case, it's to your advantage that they count the money towards the next payment. Otherwise, you could make a payment too early and be hit with a "missed payment" fee. I just read a story on the web where a guy paid his credit card one day too early while carrying a balance. They counted it towards the principle, but not to the upcoming payment cycle. This caused him to "miss" a payment and be hit up with outrageous fees. The way it’s supposed to work is that the interest is calculated daily (probably) or monthly on the remaining amount. Then, if you make a payment ahead, the remaining amount will be lowered so the interest owed would be lowered. Once the loan is paid off, you are due a rebate check for the early payments. This happened to me with a car loan I paid off about 7 years ago. I haven’t had a loan lately, so maybe banks are trickier now than I remember.

If this is the case, it’s to your advantage that they count the money towards the next payment. Otherwise, you could make a payment too early and be hit with a “missed payment” fee. I just read a story on the web where a guy paid his credit card one day too early while carrying a balance. They counted it towards the principle, but not to the upcoming payment cycle. This caused him to “miss” a payment and be hit up with outrageous fees.

]]> By: paulhttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1501 paul Sun, 11 Oct 2009 03:57:23 +0000 http://www.fiscalgeek.com/?p=1031#comment-1501 Yeah and to add insult to injury my mortgages (yes plural) are with Wells Fargo. Awesome. Thanks for dropping by! Yeah and to add insult to injury my mortgages (yes plural) are with Wells Fargo. Awesome. Thanks for dropping by!

]]> By: Financial Samuraihttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1500 Financial Samurai Sun, 11 Oct 2009 00:59:57 +0000 http://www.fiscalgeek.com/?p=1031#comment-1500 Gosh,, stuff like this ticks me off. What's worse, Wachovia is Wells Fargo now, and Wells Fargo is shady, especially with their mortgage rates, and what Cheronda Guyton do with that foreclosed Malibu house! .-= Financial Samurai´s last blog ..<a href="http://feedproxy.google.com/~r/FinancialSamurai/~3/SWr-i57iwDg/" rel="nofollow">We're Ignorant Idiots! Please Tell Us Why A Flat Tax Is Not Fair.</a> =-. Gosh,, stuff like this ticks me off. What’s worse, Wachovia is Wells Fargo now, and Wells Fargo is shady, especially with their mortgage rates, and what Cheronda Guyton do with that foreclosed Malibu house!
.-= Financial Samurai´s last blog ..We’re Ignorant Idiots! Please Tell Us Why A Flat Tax Is Not Fair. =-.

]]> By: Credit Card Chaserhttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1485 Credit Card Chaser Sat, 10 Oct 2009 05:49:10 +0000 http://www.fiscalgeek.com/?p=1031#comment-1485 Congrats on your progress! My mortgage is through Sun Trust and they have a checkmark option on their online e-pay for any additional amount that I want to through directly towards the principal so I am very please with them. .-= Credit Card Chaser´s last blog ..<a href="http://www.creditcardchaser.com/wells-fargo-expected-to-raise-credit-card-interest-rates-3/" rel="nofollow">Wells Fargo Expected to Raise Credit Card Interest Rates 3%</a> =-. Congrats on your progress! My mortgage is through Sun Trust and they have a checkmark option on their online e-pay for any additional amount that I want to through directly towards the principal so I am very please with them.
.-= Credit Card Chaser´s last blog ..Wells Fargo Expected to Raise Credit Card Interest Rates 3% =-.

]]> By: JoeTaxpayerhttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1468 JoeTaxpayer Thu, 08 Oct 2009 19:47:24 +0000 http://www.fiscalgeek.com/?p=1031#comment-1468 Paul, Bad system, agreed. For mortgages, this is even more important as the dollars can add up fast. If one pays their mortgage by check, and is taking an extended vacation, they may want to make the payments ahead. If they are clustering their deductions to get higher Sch A itemized deduction in a given year, paying early can help. But of course, if they are trying to make principal payments and the bank isn't accounting properly, it make take some time before the customer realizes something is wrong. You'd think this concept would be easy for the banks to grasp, but i agree, they have no motivation to do so. When they make a mistake, they should pay you a penalty, just like we pay them for our mistakes. Joe Paul,
Bad system, agreed. For mortgages, this is even more important as the dollars can add up fast. If one pays their mortgage by check, and is taking an extended vacation, they may want to make the payments ahead. If they are clustering their deductions to get higher Sch A itemized deduction in a given year, paying early can help. But of course, if they are trying to make principal payments and the bank isn’t accounting properly, it make take some time before the customer realizes something is wrong.
You’d think this concept would be easy for the banks to grasp, but i agree, they have no motivation to do so. When they make a mistake, they should pay you a penalty, just like we pay them for our mistakes.
Joe

]]> By: paulhttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1466 paul Thu, 08 Oct 2009 16:31:56 +0000 http://www.fiscalgeek.com/?p=1031#comment-1466 That's great advice Jack I'll do just that. That’s great advice Jack I’ll do just that.

]]> By: Jack Foleyhttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1465 Jack Foley Thu, 08 Oct 2009 16:00:30 +0000 http://www.fiscalgeek.com/?p=1031#comment-1465 Pull out the original loan agreement. Look up what the loan agreement says about payments in excess of your regularly scheduled payment. Most agreements are written putting these excess payments on principal of note. The organization is obligated to follow their contractual agreement with you regardless of any policies, procedures and systems they may have in place that causes them not to follow the terms of the contract. Check it out. If they aren't following the terms of the agreement, send them a copy of the agreement and get them to do it right. Pull out the original loan agreement. Look up what the loan agreement says about payments in excess of your regularly scheduled payment. Most agreements are written putting these excess payments on principal of note.

The organization is obligated to follow their contractual agreement with you regardless of any policies, procedures and systems they may have in place that causes them not to follow the terms of the contract.

Check it out. If they aren’t following the terms of the agreement, send them a copy of the agreement and get them to do it right.

]]> By: Kosmo @ The Casual Observerhttp://www.fiscalgeek.com/2009/10/principle-vs-prepaying-and-our-debt-snowball/#comment-1462 Kosmo @ The Casual Observer Thu, 08 Oct 2009 12:45:31 +0000 http://www.fiscalgeek.com/?p=1031#comment-1462 When we had our mortgage with CountryWide, we had extreme difficulty getting them to grasp the concept of an extra principal payment. It eventually got straightened out, but it too way to much effort and involved way too many people. We ran quickly away from CountryWide when we refi'd (particulary since they were taken over by Bank of America, where we had an unpleasant experience). We're with Chase now, and everything actually works like it should and gets applied properly. There's really no excuse for not having a "principal only" option for an online payment. In the grand scheme of things, it doesn't take that much more development time. I'm an IT guy, so I realize that this is a 5 minute coding change, but it's relatively small considering how important the payment receiving system is to the organization. .-= Kosmo @ The Casual Observer´s last blog ..<a href="http://feedproxy.google.com/~r/TheCasualObserver/~3/dPKiRPY-krI/" rel="nofollow">Eight Burning Questions About the Playoff Teams</a> =-. When we had our mortgage with CountryWide, we had extreme difficulty getting them to grasp the concept of an extra principal payment. It eventually got straightened out, but it too way to much effort and involved way too many people.

We ran quickly away from CountryWide when we refi’d (particulary since they were taken over by Bank of America, where we had an unpleasant experience). We’re with Chase now, and everything actually works like it should and gets applied properly.

There’s really no excuse for not having a “principal only” option for an online payment. In the grand scheme of things, it doesn’t take that much more development time. I’m an IT guy, so I realize that this is a 5 minute coding change, but it’s relatively small considering how important the payment receiving system is to the organization.
.-= Kosmo @ The Casual Observer´s last blog ..Eight Burning Questions About the Playoff Teams =-.

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