Hi everyone,
I’m going to need your patience with this one. I’ve seen this question asked before, but the responses still confuse me. I even called Edfinancial for an explanation, but the lady on the phone hung up on me. So, I hope someone here can explain it simply.
When making an overpayment, you see these options:
-
No, advance my due date by the number of payments I cover.
Even if you have no amount due on your billing statement, continuing to make payments will reduce your total cost of borrowing. -
Yes, bill me for my full monthly payment.
You will be required to make a full monthly payment with your next billing statement.
I might be misunderstanding how paying off loans works, but I’m trying to make large overpayments on my highest interest loan to minimize interest over time.
For example, my monthly payment is $500, but I plan to make a large monthly payment of $5000.
From what I’ve read and what the lady on the phone said, it seems like the option I choose doesn’t matter. But I can’t understand why.
Wouldn’t Option 1 mean that my $5000 would cover the next 10 months of payments, so I wouldn’t be billed for the next 10 months?
And wouldn’t Option 2 mean that I pay $5000 this month, but still owe $500 next month?
Am I just super confused? My goal is to pay around $5000 every month to pay off my highest interest loan as quickly as possible. I sincerely appreciate your help!