Student Loan Fraud, fact statistics....
Ok, someone tell me how to find out if a lender has been sued or is being sued
for fraud. Our student loans are with ELSC (USA group) and Eduserv and CHELA
and they say they charge 11% interest but in the 3 years i've been paying (on
time and ahead of schdule plus extra $$) they send me a report (at my request)
stating that i have only paid 400 off the principal (i've sent them over 2000
for that one loan already!) When i look at the monthly payment history they
take 28 for interest and apply 27 towards my principal, even when i
specifically request that they put the extraa $$ towards the principal. To
me that is nearly 50% annual interest!!!!!!! And supposedly this loan is for
10 years????? It is a 4000 dollar loan that i will end up paying 2700 dollars
on!! Somehow this seems like loansharking, isn't this illegal??? Someone
tell me how this works, i'd like to sue them for fraud, i want to know if
there have been any class action suits for fraud against these lenders? My
credit cards are more honest! at least htey say 18%!Q!!!!
This is known as amoritization. Your first payments will be composed of
interest primarily, but the very last payment you make will be primarily
principle. This is exactly the same thing as buying a house. To reduce
your interest payments over the long-term, send a SEPERATE check for
whatever extra amount that you can afford. This will go toward directly
reducing the principle (and thus, the interest). For example, you owe
$10,000 at 10% interest. Your interest payment for month one will be 10%
divided by 12 (months) for a monthly interst rate of .0083333. Since you
owe $10,000, you will pay $83.33 in interest for that month. If your
payment is $100, then you get principle reduction of $16.67 and you now owe
$9,983. Month 2's interest is $83.19 w/ $16.81 in reduction of principle
for a total debt at end of month 2 of $9,966.52. So, you are not being
charged 50% interest, you are merely paying the interest at the front of
the note. This is accepted practice in most financing scenarios. Also,
before you begin making those extra payments, consult your original
contract to see if there is any early payment penalty.