I took out a $50,000 equity loan in June of '04. They auto withdrew $520 every month. They applied $416 to interest and the principal is still at $48,000. To date I have paid over $24,480 in interest. I feel stupid and sick. What can I do?
Your loan sounds like it was written at about 10% on a 16-year repayment schedule. It's not at all unusual for the principal balance of a long-term loan to go down slowly during the first years of the payment schedule. You should ask your lender for an amortization schedule for your loan, which will show you how the speed with which principal is repaid increases as you gradually reduce the principal balance.
You can speed up the principal repayment and lower your interest costs by increasing your monthly payment. You can also ask your lender if he would entertain a modification of the loan to reduce the interest rate, but leave the monthly payment untouched. That would greatly accelerate the repayment of principal. If your current lender won't budge, you can shop around for refinancing.
BankingQuestions.com is a free service made possible by the generous support of our advertisers. Advertisers are not responsible for site content. Please help us keep BankingQuestions.com FREE by supporting our advertisers. When you see an ad for a product or service you may have an interest in, click through to learn more.
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
Your loan sounds like it was written at about 10% on a 16-year repayment schedule. It's not at all unusual for the principal balance of a long-term loan to go down slowly during the first years of the payment schedule. You should ask your lender for an amortization schedule for your loan, which will show you how the speed with which principal is repaid increases as you gradually reduce the principal balance.