Planet Descent
Community => Mess Hall => Topic started by: VANGUARD on July 28, 2015, 06:07:07 PM
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My wife has a student loan through a bank. This account balance has not changed. The amount on there months back is still the same. I know we feel as though we can never seem to pay things down. So I jotted down the account balance, to the penny, and lo and behold, another monthly statement is ready, and the amount is the SAME.
Does anyone understand what is going on? I know we were quite a few months behind on it, but she had paid it before for several months beforehand.
It's a well known bank.
Account balance does mean how much left she pays on it, right? It just doesn't seem right that we did not see a penny drop and this has been going on for months.
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Some banks offer "interest-only" loans (which, IMHO, is poor practice, as it essentially keeps the client in debt indefinitely). It's very possible that every penny you're spending is only on interest, which is pure profit for the bank. I'd call and ask about it... If that's the case, you definitely need to seek refinancing options (if you can do that with student loans) and figure out a way to either stretch out those payments and chip away at the principle little by little, or figure out how you and your wife can scrape together a little extra each month to get it out from underneath you quicker.
But yeah, my first suggestion is calling them. Good luck!! :)
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Some banks offer "interest-only" loans (which, IMHO, is poor practice, as it essentially keeps the client in debt indefinitely). It's very possible that every penny you're spending is only on interest, which is pure profit for the bank.
That seems worse than poor practise it seems like it shouldn't be legal. I can understand the appeal but it feels an awful lot like exploitation.
I'll have to do more research.
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It is legal, in fact just about every consumer loan requires you to pay off the interest before the principle. Your account statement should include interest, payment information, and how it's being applied.
But if the balance shown on your statement is the same, even though you've made payments, something sounds wrong there... glitch in the system or something like that. I find it highly unlikely you made payments exactly for the interest amount.
Also, why do you need to 'write it down'? If you aren't getting a paper copy, print out the statement every month. If you don't want to use paper, at least use something like CutePDF (http://www.cutepdf.com/) which installs like a printer, but saves to a pdf for your records.
At any rate, don't delay in talking to your bank rep to sort this out. Go down to the bank in person, I find you get much better service face to face, and probably quicker than dealing with phone service.
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The idea behind interest only loans is that someone can pay the interest and not slide further in dept. For example a student could pay just interest during school season, but get a summer job and pay extra to bring the principle down. After graduating, convert to a regular loan to make sure it gets paid off quickly.
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The advantage there is how much easier it is to handle the debt burden while on the limited budget one usually has while still in school and while looking for better paying employment.
The dis-advantage is you still have the debt burden waiting for you (which is why you pay off more than just the interest whenever you can as fast as you can.
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I had a situation back when I was paying off a loan (seems like it was my student loan, but I'm not certain) when a payment check wasn't applied to the loan, and I got a non-payment notice.
After a few calls to figure out what was going on, they finally figured out that the check was applied to the wrong loan number. They apologized, and fixed it, and I never had issues again.
I'll echo the advice: Call them (or better, drop by your local branch with your paperwork) to find out what's going on.
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The advantage there is how much easier it is to handle the debt burden while on the limited budget one usually has while still in school and while looking for better paying employment.
The dis-advantage is you still have the debt burden waiting for you (which is why you pay off more than just the interest whenever you can as fast as you can.
From the research I did already it sounded like you can't even start paying off the non-interest until a set number of years later, and the bank could theoretically hide a loophole to let them extend the term where you're just paying interest for as long as they wanted as many times as they wanted... that's why it sounds like exploitation to me.
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'hide a loophole'? You could apply that logic to any contract.
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We have this bank about a few blocks from us. We will either go there or call. Going there may be tough as I work long hours, and not sure about them being open on the weekend.
I guess I am writing it down just so I know for sure what is going on. They must be doing something with the money.
update: I tried to call, but a little too late at night. I found this on the the account: Outstanding Accrued Interest.
Does the Outstanding Accrued Interest have to be paid off first or what is this?
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'hide a loophole'? You could apply that logic to any contract.
It's true, my thoughts come out kinda clunky in writing. I don't think in words, entirely. Sometimes what I mean isn't exactly what I say, because there aren't any good words for it and I'm trying to get as close as I can.
I'll just say I can see why experts advise against these loans. No more comment from me.