Comments on: Reno loan GONE!

By: threadbndr

threadbndr — Wed, 27 May 2009 17:24:50 +0000

Whoa, that’s just weird. When I paid of the balance on my mortgage with the life insurance proceeds, it just took a few minutes on the phone. (Which was a good thing, I was in no shape to even drive across town at that point.) And Walt and I had never had any problems with paying extra on the principle either. Our coupon book even had a spot to mark how much extra to principle you were paying. The only snag we hit was after we set up auto debits. Then you had to be sure the standard payment had cleared before sending the stub in with a check for the extra.

Congrats on paying off the loan.

By: funny

funny — Mon, 18 May 2009 12:27:43 +0000

@ Jake: They tried to tell me that, too, the first time I went in to pay toward principal. In my CU’s case, it wasn’t true: they just try to discourage people from paying off loans early. I had specifically asked, when I took out the loan, if there was any problem about paying it down early and was told not, that would be OK. So I threw a sh*t-fit and made such a scene in the lobby that a manager came out and conceded that of course I could pay it down. The teller needs a secret code to apply your money to principal, a code that isn’t ordinarily given to tellers: it’s “LOPC.” I don’t know what those letters stand for; only that if you put that on a check and you emphasize to the teller that the money is to be applied LOPC, it works.

By: Jake Stichler

Jake Stichler — Mon, 18 May 2009 06:05:16 +0000

Grats! My credit union seems to have quite a bit of confusion about making extra payments towards principal as well. A few birthdays ago, all of my sisters each made a loan payment for me, and it resulted in me not having to make any payments for a few months. Then, about a year ago, I inquired about making payments to principal, and was told absolutely, yeah, I can do that after I make the regular payment, just tell the teller to put it to principal. When it didn’t happen, I inquired about it, and was told that it’s impossible (even against the loan contract).

However, it’ll be a few years til my snowball makes it that far, so no worries for me yet… grats again, I can’t imagine holding on to such a large amount of money all at once only to watch it disappear into a non-tangible void.

By: Carnival of Debt Reduction » Blog Archive » Welcome to the Carnival of Debt Reduction

Mon, 18 May 2009 05:45:41 +0000

[...] Funny About Money paid off a $21k loan. [...]

By: funny

funny — Sat, 16 May 2009 00:09:59 +0000

@ Revanche: It must have something to do with being a loan against a house. I had the same experience you did with my car loan: no problem paying on principal each month and no problem clearing the loan off the books. As I recall, I used to send in the regular payment and with it, I’d add another check marked “for principal only.”

Paying off a regular mortgage is a bit of an adventure, too. You can’t just send in the amount owing and be done with it. You have to jump through a bunch of hoops, and if the amount you’re going to pay is large, you have to prove where you got the money. And “this month’s meth sales” doesn’t make it…they have no sense of humor!

By: Revanche

Revanche — Fri, 15 May 2009 22:19:52 +0000

Good grief, they really didn’t want your cash going towards that loan! I don’t remember having any trouble at all with my credit union when paying my auto loan off. Not only did I pay $150 more towards principal every month during the life of the loan, I paid it off 2 years early.

And I never had to set foot in the credit union because it’s too far away; all our transactions were by mail and once in a blue moon, by phone. That was quite a few years ago, though, perhaps they’re now less amenable to prepayment.

By: funny

funny — Fri, 15 May 2009 14:14:44 +0000

@ frugalscholar: Yes, I think that’s one of the implications. That this is considered a task a teller can do but two tellers didn’t know how to do it suggests there’s little demand for the task.

The other issue is that the credit union actively discourages prepayment of loans. When I first started to snowflake this loan down, they put up quite a fight. At the outset, they told me payments toward principal were not allowed (or, in a related iteration, “impossible”). Then they tried to tell me that if I had extra cash to put toward principal, I had to show up in person on the loan’s due date, at the right time of day, so that the money could be put toward the loan after the regular p&i payment was made; otherwise any amount I paid in would be applied to interest.

Then it turned out that they had a code (“LOPC”) that had to be marked on the check in order to make the payment apply to principal. As it develops, asking a teller to apply a payment “LOPC” works on any day of the month, but you have to go in person to submit such a payment.

They charged an extra $37, btw, for the privilege of forking over $21,422 to their coffers. Payoff fee–I specifically asked, when I took out the loan, if there were any prepayment penalties and was told there were not. It’s not enough to keep me from getting rid of the loan…but there it is.

And credit unions are a great deal more user-friendly than banks about this sort of thing. If I’d had the loan through a bank, I’m might have been confronted with even more hassle and cost.

By: frugalscholar

frugalscholar — Fri, 15 May 2009 13:50:47 +0000

This must be a huge relief. It probably would have taken 5 minutes to get a loan (everyone at the Credit Union can do that). Obviously, the payoffs are rare.

By: Money Beagle

Money Beagle — Fri, 15 May 2009 11:13:19 +0000

Congrats on paying off the loan early! The bank teller issues aside, this is the type of thing that should hopefully motivate lots of other people to knock out that debt!