Hello! been wondering about paying down a loan

[JeepChick]

Thanks!

[Gingerly]

What do you mean?

[JeepChick]

OK, I didn't see how to pay down a loan, so I will present my info and see if I can get some questions answered.

 

I had a 5K loan with AIG. with 25% interest. We said we'd pay it off in a couple months, but of course, we're nearing the first anniversary and we still owe like 4700.

 

The payment is 147.

 

So, what kind of calculate do I search for to figure out what happens if I add extra principal? like, how much interest do I save and how much shorter does the loan get?

[Gingerly]

Try this calculator.

 

You can factor in extra payments.

[JeepChick]

Try this calculator.

 

You can factor in extra payments.

<{POST_SNAPBACK}>

Oh my goodness that is depressing. Paying as the loan states makes the last payment 2/2/09 with total interest paid of 3805.40 according to this amortization calculator I have already paid $1187.17 in interest and $53.43 in principal.

 

$50 extra monthly makes the loan end 3/07 and total interest paid will be 2193.40

 

$100 extra montly makes the loan end 5/2/06 and makes the total interest paid 1563.82

[Netookt]

$477.88 per month will payoff your credit card in 12 months.

 

To pay off your credit card balance of $5,000 in 12 months you need to pay $477.88 per month. This includes your additional monthly purchases of $0 and your major purchases. This assumes no additional charges such as late fees. If you keep your monthly payment at $147 it will take 62 months.

 

 

Added:

Pre-Payment Summary

 

Amount $100.00 Monthly

Start with payment 1

Total payments $6,563.82

Total interest $1,563.82

******************Interest savings $2,241.58

Edited February 3, 2005 by Netookt

[JeepChick]

Netookit, Thanks for your help, its a loan. I've already paid a year into it. Krikey what an expensive loan, I only took the loan because we thought we'd pay it off right away. 12 months have passed and we've barely made a dent into it.

[WebGo]

Jeep check-

 

Also, you should check the terms of your loan. Many of the high rate loans do NOT apply extra payment amounts to the principle, but rather to future payments. That can have a material effect on the time to pay off your loan and the interest you pay. I am not sure if the calculator you used assumed that the extra payments were going directly to the principle or not.

[JeepChick]

Jeep check-

 

Also, you should check the terms of your loan.  Many of the high rate loans do NOT apply extra payment amounts to the principle, but rather to future payments. That can have a material effect on the time to pay off your loan and the interest you pay. I am not sure if the calculator you used assumed that the extra payments were going directly to the principle or not.

<{POST_SNAPBACK}>

the calculater applied to the principal, but I will double check my loan docs to see where extra payments go.

[idtheftvictim]

Maybe you could surf the balance to a lower INT rate credit card???? AIG is a preditorial lender....need to get away from them ASAP....

 

Did this loan start out as a 0% loan, or no?

[shop_free]

What have learned about paying off loans including your mortgage is for example.

Your loan is due on the fifteenth with a pmt of $300.

You pay $150 on the first.

You pay $150 on the second.

This reduces your Principal quicker and you pay less on interest and at the end of the year you would have made an extra pmt.

This works really well with mortgages.

As with a 30 year loan you easily shave off 5 years.

[JeepChick]

Maybe you could surf the balance to a lower INT rate credit card????  AIG is a preditorial lender....need to get away from them ASAP....

 

Did this loan start out as a 0% loan, or no?

<{POST_SNAPBACK}>

It was a 25% loan from the beginning. We agreed when we signed the loan that we would pay off the loan quicker to save on the interest. We had figured on paying it off within a couple months due to a windfall coming in, guess what...we couldn't.

 

well, we could have, but I bought a jeep....well actually, the windfall covered the income my husband wasn't earning, so the loan wasn't paid off...but I still bought a jeep. I don't regret it either.

 

I do regret the loan.

[idtheftvictim]

Maybe you could surf the balance to a lower INT rate credit card????  AIG is a preditorial lender....need to get away from them ASAP....

 

Did this loan start out as a 0% loan, or no?

<{POST_SNAPBACK}>

It was a 25% loan from the beginning. We agreed when we signed the loan that we would pay off the loan quicker to save on the interest. We had figured on paying it off within a couple months due to a windfall coming in, guess what...we couldn't.

 

well, we could have, but I bought a jeep....well actually, the windfall covered the income my husband wasn't earning, so the loan wasn't paid off...but I still bought a jeep. I don't regret it either.

 

I do regret the loan.

<{POST_SNAPBACK}>

 

Is there anyway to free up "extra" money each month so that you can send in larger payments?? Like cut some of your bills? Maybe cut your spending on everything to kick in the higher payments...or even get another side job to bring in some more money?

 

How much is the loan for? What are your monthly minimum payments??

[JeepChick]

We're self employed so we don't work off our income like others do, but starting Feb 10, I will try to add $50 to the payment every month. The payment is $147 per month. we have 4 years left to pay.

 

If I can afford it I will add $100. I can spend $100 easy, meaning it may be hard but I can also NOT spend an extra $100. I can make sure we eat in all the time, instead of eating out occasionally.

 

Edited: We borrowed 5K, we still owe 4700 approx, and the payment is 147

Edited February 4, 2005 by JeepChick

[idtheftvictim]

We're self employed so we don't work off our income like others do, but starting Feb 10, I will try to add $50 to the payment every month. The payment is $147 per month. we have 4 years left to pay.

 

If I can afford it I will add $100.  I can spend $100 easy, meaning it may be hard but I can also NOT spend an extra $100.    I can make sure we eat in all the time, instead of eating out occasionally.

 

Edited: We borrowed 5K, we still owe 4700 approx, and the payment is 147

<{POST_SNAPBACK}>

 

It is too bad you can't surf the balance to a 0% loan....then you could kill that little loan ASAP....but if that can't be done, I would look at your budget, get one written down, and STICK TO IT...set aside $250 a month to send to that darn loan...don't spend the extra 100....but send it right away to the stupid loan....

 

Maybe you can make multiple payment a month...like 50 every 2 weeks...so it doesn't seem like you HAVE the money to spend....ya know what I am trying to say?

[JeepChick]

THe hard thing is we get paid erratically. SO i may get paid once and then not again for 2 months. Sometimes I may not know if I pay that extra $ now, will I need it for something else later.

 

So, I have an attachment to my money and have a hard time spending it down.....its hard to describe.

 

We also have to make payroll everyweek so they get $ first. Its a very precarious balance...at least we HAVE income right now. I should be thankful for that.

 

anyway, $50 should not be hard. $100 would be better but harder.

 

we also have other debt to pay down as soon as possible too. Its not a lot but we need to get it done.

[idtheftvictim]

THe hard thing is we get paid erratically.  SO i may get paid once and then not again for 2 months.  Sometimes I may not know if I pay that extra $ now, will I need it for something else later.

 

So, I have an attachment to my money and have a hard time spending it down.....its hard to describe.

 

We also have to make payroll everyweek so they get $ first.  Its a very precarious balance...at least we HAVE income right now.  I should be thankful for that.

 

anyway, $50 should not be hard.  $100 would be better but harder.

 

we also have other debt to pay down as soon as possible too. Its not a lot but we need to get it done.

<{POST_SNAPBACK}>

 

Not to try and "pry" into your finances, but this is a money management forum after all.....

 

Maybe you could post your budget, and possible income, we could see if there is any "fat" that could possibly be cut out in order to free up some $$$....Also, maybe you could list your debts....smallest to largest, with the balance, minumum monthly maypents, and the INT rate....

 

There is ALWAYS a way to get rid of this stuff so that you have more free money....

[JeepChick]

Ok, I will do but the income would be the hardest of them all......I need to get going now so this task may be saved for Monday.

[idtheftvictim]

Ok, I will do but the income would be the hardest of them all......I need to get going now so this task may be saved for Monday.

<{POST_SNAPBACK}>

 

Monday works for me...that is when I will be back anyways...LoL

[JHowell1976]

I took a similar loan from Wells Fargo Financial several years ago. I think the rate was about 34%. You can't pay next years interest on a loan this year. Companies like AIG and WFF will add the principal and all the expected interest together and come up with one figure that is made to look like your balance. However, when you call them and ask for a payoff amount they have to give you the principal amount as of today. They can't really apply money to next months interest. Remember interest is the cost of money over a period of time. If you pay only according to the terms of the loan, then the money will cost you 3800$ over the course of the loan. If you hit the lottery tomorrow and take AIG a check for 4700$, but your best bet would be to give them one check for this month's payment and one more for the bablance of the loan to be applied to principle. The monthly payment would cover the interest for this month. They can't charge you in advance for next month's interest.

 

Here's where it gets tricky. By now you understand that you've taken a loan that would make a loan shark blush. And it's from a predatory lender. They may try to apply larger than normal payments to future interest. They may try all sorts of illegal things. Why? Because they are dealing with people who have to borrow money at 25%. People in this position don't usually have a very powerful voice. The reason they apply an extra payment this month to the payment for next is because they know that most people who borrow money at 25% will look at next month's amount owed, see 0$. and not pay for the month. Most people who borrow cash at 25% only pay back when they have to. It ensures that you will use their money for the duration of the loan contact and they will make a boatload of money off of you. No matter how far ahead you get, no matter how often they tell you to take a break for a month, don't do it. You cost them money when you pay ahead.

[stocks12]

The other things to note with AIG specifically is they will apply extra payments to next months minimum payment. I recently financed a home shed with them to get 12mts/0%. The payment is $192/mo for 24 months. If I don't pay it off in 12 months, interest is added from the first day. I pay $200 every month. 4 months into the loan and I am at a monthly payment now of $160 and then it would jump back up. My plan is to keep plugging $200 a month until Spetember (month 11) and then pay the balance. The rate that interest is accruing is 29.99%.

[JeepChick]

taking an unprepared stab at this:

 

Mortgage $2098.64 (6.75% on 230,344 for a 20 year loan)

2nd Mortgage $168.75 (15,000 I/O 13.5%, maturity date 7/7/06) <---OUCH

GMAC truck $763.45 (balance 24,047.28 at 3.9%, financed amount 41,500.49)

GMAC Suburban $605.98 (balance 21,815.47 at 0%, purchased 8/02)

Chase MC, $148 min. ($6021, at 29.24% I was ratejacked, this was prime)

Orchard MC, $106.80 min ($938.80, at 22.9%<---this card is over limit)

Cap One Visa, $31 min (1264.18 at 26.25% we usually PIF this card)

Providian Visa $118 min (2007.46 at 29.93% <---rate jacked)

American General $147 (25% and remains 4783, 4 years left)

Car Insurance $400/month

Life Insurance $40/month (Term)

City Utilities $70/month

Cell Phone me $40/month

Cell Phone DH $100+/month (remember we are self employed)

Food ?

Fuel ?

Gas and Electric $150/month (winter)

Cable Internet $35 we will add basic cable for $9/mo, and internet rate will drop

 

Payroll costs this week $2512.77

General Liability $250/month

 

 

I'm sure I'm forgetting something....

 

OH! Income!

2001, Schd.C gross income 198.987, net profit 55,903, AGI 49,791

2002, Schd.C gross income 319,595, net profit 59,242, AGI 55.078

2003, Schd.C gross income 412,305, net profit 129,823, AGI 117,418

 

2004, P&L through 12/10 gross income 55,205.44 COGS 61,799.38, expenses 13,814.30 making the net income -22,408.35 There is other income not in P&L yet, a kitchen remodel and we started 2005 pretty well and looks to be good.

Edited February 9, 2005 by JeepChick

[JeepChick]

I also owe a boatload of taxes, but we will be filing a NOL chargeback when we get our return done.

We also owe the accountant about 2K

 

also, we are being sued and I plan to settle, but the cost is 4200 to pay the OC (a local dentist, so it is medical) I'm starting to worry about that because I don't think we'll have the money. Our house was for sale and we planned to pay out of our equity. However, the financing would have been unreasonable due to our scores and so we cancelled the sale)

Edited February 9, 2005 by JeepChick

[idtheftvictim]

taking an unprepared stab at this:

 

Mortgage $2098.64  (6.75% on 230,344 for a 20 year loan)

2nd Mortgage $168.75 (15,000  I/O 13.5%, maturity date 7/7/06) <---OUCH

 

OUCH is right....anyway to sell the house and move into something smaller?

 

GMAC truck $763.45 (balance 24,047.28 at 3.9%, financed amount 41,500.49)

 

Again, this is a killer...the APR isn't bad, but the payment is...anyway to sell this? Are you "upside down" in the loan?

 

GMAC Suburban $605.98 (balance 21,815.47 at 0%, purchased 8/02)

 

Again, anyway to sell this and get a CHEAPER USED vehicle??  THiese cars and mortgage are KILLING you

 

Chase MC, $148 min. ($6021, at 29.24% I was ratejacked, this was prime)

 

Anyway to surf the balance to a new card, or call and get on hardship plan?

 

Orchard MC, $106.80 min ($938.80, at 22.9%<---this card is over limit)

Cap One Visa, $31 min (1264.18 at 26.25%  we usually PIF this card)

Providian Visa $118 min (2007.46 at 29.93% <---rate jacked)

American General $147 (25% and remains 4783, 4 years left)

Car Insurance $400/month

Life Insurance $40/month  (Term)

City Utilities $70/month

Cell Phone me $40/month

Cell Phone DH $100+/month (remember we are self employed)

Food ?

Fuel ?

Gas and Electric $150/month (winter)

Cable Internet $35 we will add basic cable for $9/mo, and internet rate will drop

 

Payroll costs this week $2512.77

General Liability $250/month

 

How many employees do you have?

 

 

I'm sure I'm forgetting something....

 

OH! Income!

2001, Schd.C gross income 198.987, net profit 55,903, AGI 49,791

2002, Schd.C gross income 319,595, net profit 59,242, AGI 55.078

2003, Schd.C gross income 412,305, net profit 129,823, AGI 117,418

 

2004, P&L through 12/10 gross income 55,205.44 COGS 61,799.38, expenses 13,814.30 making the net income -22,408.35 

 

Ok, so it looks liek you are in the whole with your buisness, what type of buisness is it? Any way to up your income? Get another job? From what I am seeing you haven't made ANYTHING this year. Do you have your buisness and personal account separate, or are they combined? They should be 2 seperate accounts, never should mix buisness with personal....

 

There is other income not in P&L yet, a kitchen remodel and we started 2005 pretty well and looks to be good.

<{POST_SNAPBACK}>

 

With more than $3500 a month in just car and house payments, ya'll are sinking fast. Not to mention the credit cards....do you still use those credit cards on a regular basis?

[Gingerly]

2nd Mortgage $168.75 (15,000  I/O 13.5%, maturity date 7/7/06) <---OUCH

 

What does that mean? What happens on 7/7/06?