- Mar 1, 2000
- 30,859
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I'm looking at taking out a low interest personal loan to pay off some higher interest rate loans (CCs and the like)
That being said, I could afford the fastest pay back window (2 years) but it would be pushing the monthly budget. I'd prefer to take a 3 year loan at a slightly higher percentage and overpay as much as I can every month. This way if I have some unforeseen expenses, I can skip the overpayment that month and still be in good standing.
I wanted to make sure the overpayment went to principal though and this was the response:
"Yes, you have the ability to make additional payments towards your loan without penalties. Please keep in mind that when making an additional payment, it will go towards interest first, then towards principal. "
I'm confused that it goes towards interest first.... what interest? If I make the FULL fixed payment amount that month. And then throw another $100 in with it (or even later in that month) is it going towards the overall principal still owed on the loan? Or would my next month payment just be $100 lower? Or ???
Thanks... sorry. I'm dumb with things like this
That being said, I could afford the fastest pay back window (2 years) but it would be pushing the monthly budget. I'd prefer to take a 3 year loan at a slightly higher percentage and overpay as much as I can every month. This way if I have some unforeseen expenses, I can skip the overpayment that month and still be in good standing.
I wanted to make sure the overpayment went to principal though and this was the response:
"Yes, you have the ability to make additional payments towards your loan without penalties. Please keep in mind that when making an additional payment, it will go towards interest first, then towards principal. "
I'm confused that it goes towards interest first.... what interest? If I make the FULL fixed payment amount that month. And then throw another $100 in with it (or even later in that month) is it going towards the overall principal still owed on the loan? Or would my next month payment just be $100 lower? Or ???
Thanks... sorry. I'm dumb with things like this
