Comments on: How can banks get away with applying extra principal payments to future payments not yet due? http://valueoffuturepayments.com/how-can-banks-get-away-with-applying-extra-principal-payments-to-future-payments-not-yet-due Future Payments Value Advice Mon, 06 Sep 2010 05:10:18 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: efflandt http://valueoffuturepayments.com/how-can-banks-get-away-with-applying-extra-principal-payments-to-future-payments-not-yet-due/comment-page-1#comment-57 efflandt Sun, 14 Mar 2010 00:38:36 +0000 http://valueoffuturepayments.com/how-can-banks-get-away-with-applying-extra-principal-payments-to-future-payments-not-yet-due#comment-57 If you want extra payment to be applied to principal you may have to specifically state that with the payment (especially if made separate from the normal payment). You don't say what type of loan, but the only type of loan I could think of where that might happen is a car loan. I don't know if they still use rule of 78's, which I never understood, by seems to be a way of working in a prepayment penalty (you end up paying a higher effective interest rate if paid off early). If you want extra payment to be applied to principal you may have to specifically state that with the payment (especially if made separate from the normal payment).

You don’t say what type of loan, but the only type of loan I could think of where that might happen is a car loan. I don’t know if they still use rule of 78’s, which I never understood, by seems to be a way of working in a prepayment penalty (you end up paying a higher effective interest rate if paid off early).

]]> By: tmlinla28 http://valueoffuturepayments.com/how-can-banks-get-away-with-applying-extra-principal-payments-to-future-payments-not-yet-due/comment-page-1#comment-56 tmlinla28 Sun, 14 Mar 2010 00:26:58 +0000 http://valueoffuturepayments.com/how-can-banks-get-away-with-applying-extra-principal-payments-to-future-payments-not-yet-due#comment-56 I have heard of this happening many times. The best way to handle this situation is to go to the bank/credit union in person and specifically tell the person taking the payment that you want it applied to the principal. Give it a minute and tell them again! Make sure it sinks in! If you can't go into the bank/CU, on your payment stub in big dark letters, write it out that payment should be applied to principal and make a copy of both the stub and your check before you send it. Always get proof. Then later, check your balance to verify that the principal was decreased by the amount that you wanted applied to it. I have heard of this happening many times. The best way to handle this situation is to go to the bank/credit union in person and specifically tell the person taking the payment that you want it applied to the principal. Give it a minute and tell them again! Make sure it sinks in!

If you can’t go into the bank/CU, on your payment stub in big dark letters, write it out that payment should be applied to principal and make a copy of both the stub and your check before you send it. Always get proof.

Then later, check your balance to verify that the principal was decreased by the amount that you wanted applied to it.

]]> By: frediwhite@verizon.net http://valueoffuturepayments.com/how-can-banks-get-away-with-applying-extra-principal-payments-to-future-payments-not-yet-due/comment-page-1#comment-55 frediwhite@verizon.net Sat, 13 Mar 2010 23:54:35 +0000 http://valueoffuturepayments.com/how-can-banks-get-away-with-applying-extra-principal-payments-to-future-payments-not-yet-due#comment-55 Extra funds are being applied to the principal; there are only two places they can go, the other being interest. What did you think 'future payments' were? Extra funds are being applied to the principal; there are only two places they can go, the other being interest. What did you think ‘future payments’ were?

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