Where did my money go???

[dawniedawn67]

My loan is out of rehab and back with DLSS, and yesterday I got my PIN so I could go online and check out my account.

 

While looking at the payments I've made I noticed that, while I made monthly payments of $200, I am only credited for $161.30. The amounts they apply to the principal and interest differed each month too - one month they applied $59 to the principal and $102.30 to the interest, and another month they applied $92 to the principal and $69.30 to the interest. When they got my tax refund of $2500, they applied $100 to the principal and $2400 to the interest!!

 

Why do the amounts vary each month, and what happened to the other $38.70 I paid???

[LynnInMN]

My loan is out of rehab and back with DLSS, and yesterday I got my PIN so I could go online and check out my account.

 

While looking at the payments I've made I noticed that, while I made monthly payments of $200, I am only credited for $161.30. The amounts they apply to the principal and interest differed each month too - one month they applied $59 to the principal and $102.30 to the interest, and another month they applied $92 to the principal and $69.30 to the interest. When they got my tax refund of $2500, they applied $100 to the principal and $2400 to the interest!!

 

Why do the amounts vary each month, and what happened to the other $38.70 I paid???

 

The $38.70 would be collection fees.

 

Each month your payment would be applied to fees, then outstanding interest and then principal. As your principal went down, so would your interest.

[dawniedawn67]

My loan is out of rehab and back with DLSS, and yesterday I got my PIN so I could go online and check out my account.

 

While looking at the payments I've made I noticed that, while I made monthly payments of $200, I am only credited for $161.30. The amounts they apply to the principal and interest differed each month too - one month they applied $59 to the principal and $102.30 to the interest, and another month they applied $92 to the principal and $69.30 to the interest. When they got my tax refund of $2500, they applied $100 to the principal and $2400 to the interest!!

 

Why do the amounts vary each month, and what happened to the other $38.70 I paid???

 

The $38.70 would be collection fees.

 

Each month your payment would be applied to fees, then outstanding interest and then principal. As your principal went down, so would your interest.

 

 

 

Thanks!

[Cynic]

Also, since they use simple daily interest method, the actual number of days between payments will effect the amount that goes to interest.

 

The formula is CPB X IR/365.25 X number of days since last payment.

 

EX: Your balance is 10,000 and you interest rate is 5%. You pay $100 and it reaches them exactly 30 days after you started accruing interest (and have no fees). $41.07 would go to interest and $58.93 to principle. The day after that payment you would be accruing interest on a balance of $9941.07

 

Obviously, the numbers would be different if the payment reached them even one day before or after the 30 days in my example.