Question about paying my student loan

[skives]

I have a question about paying my student loan. below are the options I have and I was wondering which one I should do?

If you submit an electronic payment that qualifies as a prepayment, you will be prompted to choose whether you want your prepayment to (1) advance your next payment due date or (2) continue regular monthly billing and apply the additional amount to help reduce your principal balance.

Thanks for the help.

[junkstuff1]

This only applies when you are paying more than the minimum payment.

What exactly are you trying to do? Are you trying to actually pay down the loan? Then go with option 2.

Frankly I don't see a reason to ever do option 1. Might as well just keep the money in a savings account until the bill comes.

[skives]

I'm trying to pay down the debt.

[junkstuff1]

Originally Posted by skives

I'm trying to pay down the debt.

Then you definitely want option 2.

All option 1 does is give money to the bank, which they keep until the next payment due date, then apply to the loan. You will still accrue the same interest as if you just paid it on the due date.

Option 2 actually reduces the balance on the loan as soon as you pay it. But it won't delay any future payments.

[Slug]

Yes, option 2.

[Eric80]

Think you have answered your own question, if you want to decrease your debt then option 2 seem more viable, and is more logical then option one. The fact that you have raised option one, is puzzling me, maybe I don’t understand it enough

[neguy11]

Originally Posted by junkstuff1

Then you definitely want option 2.

All option 1 does is give money to the bank, which they keep until the next payment due date, then apply to the loan. You will still accrue the same interest as if you just paid it on the due date.

Option 2 actually reduces the balance on the loan as soon as you pay it. But it won't delay any future payments.

I worked at a major student loan company and that's not actually true. Both options have the same effect on your loan balance as both are applied the same day, the only difference is whether you will be REQUIRED to make a payment next month.

Say your current balance is $1000 ($990 principal plus $10 accrued interest) and your monthly payment is $100. If you pay $300, in both cases your new balance will be $700 ($700 principal plus $0 accrued interest). The only difference is that in situation 1 you would NOT be required to make a payment for the next two months, though you can if you want. In situation 2 you WOULD still be required to make a payment the following month. Basically option 2 is forcing you to pay down the loan faster while option 1 gives you more flexibility.

[Michael01]

If u want and u have the money then u can go for the prepayment as it will solve your problems and u can be free from your loan.

[alphadore]

I would go for option 2.