I took a 100% loan for my university study (see my location first, though, for context), plus about $3000 per year for personal expenses. Last year I got a letter from the bank - my monthly repayment was to be $500, which was a large chunk of money from my pay. After rent, insurance, saving plans, there’s barely enough left.
This month is when the monthly instalment starts. Much to my surprise (and extreme confusion), I only have to pay $220. Called up the bank and they insisted that the figure is right. I dug through my letters and found the one which they sent me, which plainly stated that I have to pay $500.
I am hoping it is a mistake; I have to call the bank on Monday to clarify that again. There’s a large difference between $220 and $500, and if it’s really the former figure, life would be so much easier for me. Which also means that I have been worrying for nothing for the past year.
Next time, see if you can get a name and job title for the person who confirms it for you (assuming they confirm the smaller number) - and maybe, if you’re very lucky a new letter confirming the amount of the repayments. Just in case they later turn round and say “oh, no, wait, you should have been paying us $500 a month, look how much you now owe us. Pay by tomorrow, please.” Then your response to them can have actual information in it, that says things like “On X date at X time, I spoke to Y Person, Y title, who confirmed the repayment amount of $220” rather than a vaguer, “I spoke to someone on the phone at your bank and they told me I didn’t have to.” The former sounds more authoritative and might make them go away and check again, I think - even better would be a dated letter from them that says your new lower amount.
They bill me for $220 and it came in a letter. So hopefully the department that makes me pay the money is more accurate than the one that asks me for it!
Well, that’s excellent. You’ve got the bill and you pay the amount requested! I don’t blame you, though, for wanting to verify it. Do you have paperwork that states the bill would be $500 per month? Maybe they lengthened the time of repayment? It would stink to get all excited about the $220 and then get a bill for $500 (or more!) next month.
I’d check that it’s not a way to extend your payments and have you pay much more interest over the life of the loan. It sounds like the lower payment is a blessing for now, but check if you can start to pay the balance down more quickly and save yourself some money.
It would be better to finish off the loan ASAP; it’s about $32K, and if I am not wrong, if I am able to make ad hoc payment to clear it out. But now money’s tight, so every dollars count for now.
What’s the interest rate? You’re going to be paying for a long, long time and a lot of interest if you only pay $220 / month on that much debt. Seriously, try to pay at least an extra $100/month. Think of it as paying a lot less than the $500/month you thought you’d have to pay.
The interest rate is the average of the prime rates of all the local bank here.
Anyway, I made some more phone calls. This is complicated, as I took two loans. One loan has a 20 years duration, the other is 5 years. For the five years loan, there’s no running from the $300 per month while the longer loan I was informed that I can repay it with $150 per month.
I guess there wasn’t any concrete figures; the person on the phone basically did some division on the spot. Perhaps the first person I called didn’t know, or wasn’t aware, that the loan was five years.
So the next five years are going to be harder. Oh well.