gave you the payment schedule showing you the principle and interest
applied to each payment you would make. Let me show you how to cut
that loan in half. This is perfectly legal. However, depending on the
type of loan you have, penalties could be enforced. I'll cover that
part later in this article.
As must of you know, most mortage and car loans are on an
amortization schedule. If you do not have a print out of this
schedule, or you're not sure of your loan type, call your lending
institution and ask for a copy of it. You may meet a little
resistance, but tell them you would like a copy for your personal
records. This schedule shows you the monthly payments of your loan,
and how much of your money goes to the principle and interest. I have
seen people with high interest rate loans actually end up paying for
a car 3 times. That's ridiculous, but the government says it's legal.
What I am going to tell you now, is how to get around it.
When you make next months payment (let's say it is for June) write a
seperate check to pay the principle for July. Be sure to write "for
July's principle" on the check. You have just eliminated the last
payment of your loan. If you have a 30 year mortage on your home (360
payments), you eliminated payment number 360. That's right, by paying
the principle amount for the next month, you eliminate an entire
payment. By doing this each month, you will pay your home off in half
the time, and save yourself from paying for your home twice.
Now, for the bad news. Some loans apply penalties for early payoffs.
My answer to that is who cares. If you can save yourself $10,000 on a
car note, I would not worry about a $1000 early payoff fee. If you
want to check on the validity of what I have just showed you, contact
a tax attorney or a CPA. Forget about asking a mortgage lender or
loan officer, they will probably deny all of this. Believe me it
works.
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Steven M. Strowder is the author of two e-zines: Achieve
Financial Freedom and EntertainmentMust. Learn to create a
lifetime of wealth and how to enjoy it.
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