Paying back a personal loan...

[ScrimpAndSave]

My fiance has $20,000 in credit card debt. The APR on his credit cards was around 23%.

He took out a 36 month $20,000 personal loan from a credit union to at a fixed 10.59% to consolidate his debt at a lower rate. The payments are $650.95 each month for 36 months.

Would it save him any interest to pay back half the monthly minimum twice each month? I know this is true with credit cards...

Thank you all for your advice.

[disneysteve]

Probably not. A credit card is "revolving" credit. The personal loan is not. It has a fixed payment schedule with payments due on a certain day in a certain amount. They probably won't accept partial payments in the manner that a credit card does.

Good job cutting the interest rate in half, though. That should save him quite a few bucks.

[ScrimpAndSave]

Steve, thanks so much. Although it is a 36 month loan, he plans to make the minimum payment for a year (until he is out of law school) and then pay the rest off in a few months - using most of his paycheck toward it since his student loans will be deferred and rent is cheap.

Thanks!

[disneysteve]

Make sure of two things.

1. There is no prepayment penalty.
2. Any extra payments get applied to principal.

[ScrimpAndSave]

Yes, I did make sure that there is no penalty..but I didn't ask about whether or not I could apply extra payments to the principal.

[Joan.of.the.Arch]

"I didn't ask about whether or not ___I___ could apply extra payments to the principal."

You are paying for your boyfriend's apartment in another city while he is in school and you are also paying his loan that he took out to pay off credit card debt? I hope it is your boyfriend who is thinking about selling the blood plasma you ask about on another thread.

[ScrimpAndSave]

Joan,

Thanks for your concern. He had given me the payments that will be due throughout the school year - I am keeping them in my high interest savings account and paying the loan monthly for him. With ___his___ money.

[Joan.of.the.Arch]

Glad to hear I was jumping to conclusions.

[creditcardfree]

We had a personal loan at our bank when we were first married. I was able to make additional payments at anytime and they were applied to prinipal. It is important to make sure that is how they will be applied.

The next full payment is still due on its regular due date.

Sounds like he made a good choice with consolidation.