So, my home equity loan.
When I first started making extra payments a few months ago, the bills would show up for less than the monthly payment. Each month I owe them $405. I started paying $505, and the following month's bill said I owe them $305. I called them up and made sure that my extra $100 was being applied towards the principal. They said yes but since I was paying over...that I don't HAVE to pay in full the following month. What sneaks! I asked if they could break it down for me so I knew how much of my payment each month was going to interest vs. principal. They said no, because interest is added DAILY, and where my money goes depends on when I pay.
Um, WHAT??? That sucks.
So I started a spreadsheet, downloaded the history of the loan, and parsed it all out to determine how to beat their system. It's sneaky! Or I'm stupid and naive.
OK. So my bill is due on the 21st of each month. I get it in the mail 7-10 days before due date. Which is sneaky in itself, but I use my bank's bill pay. I'll suck it up. BUT...this is what I found:
Money Arrives on the 18th (3 days before due): $312 to Interest, $93 to principal!
Money Arrives on the 1st (20 days before due): $105 to Interest, $300 to principal!
So I already paid this month's (with the standard extra payment), but now I want to send a separate EXTRA $100. How much you wanna bet that they'll still pull their portion of the interest out before applying the rest to my balance? Even though I already paid this month's allotment.
SNEAKY!
Experiment: Sneaky Bank?
August 4th, 2007 at 05:28 pm
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Keep copies of everything!
Regarding how much of each payment is going to principal and how much to interest, while they can't tell you about future payments, there is absolutely no reason or excuse why they can't tell you immediately after the payment has posted.
Back when we had a mortgage, we were able to check that out by calling in or checking on-line after each payment posted, and it was a great motivator to see the percentage going to interest declining. [We had a good and honest mortgage company ... We never found anything out-of-line and they never tried to hide anything from us.]
If they won't disclose that information to you, you may want to look in to having a mortgage audit done.
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