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Aidvantage offers various payment direction options for borrowers. Let’s break down what these options mean:
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Overpayment Allocation Direction:
- Highest Interest Rate: When you make an overpayment, the extra amount will be allocated to the loan with the highest interest rate by default. This means that you will be reducing the amount of interest you pay over time.
- Highest Current Balance: Alternatively, you can choose to allocate the overpayment to the loan with the highest current balance. This can help you pay off larger loans more quickly.
- Lowest Current Balance: If you prefer, you can allocate the overpayment to the loan with the lowest current balance. This may help you eliminate smaller debts faster.
- Prorate Across Selected Loans: Another option is to divide the overpayment among all the loans you are paying based on the monthly payment amount. This can help you make progress on multiple loans simultaneously.
Underpayment Allocation Direction
- By Most Delinquent, Then Lowest Monthly Payment: When dealing with underpayments, you can choose to allocate them to loans with the greatest delinquency first, starting from the lowest to the highest monthly payment. This can help you address overdue payments effectively.
- Align Delinquencies, Then Prorate: Another option is to first pay off loans with the oldest delinquency when allocating underpayments, and then prorate the remaining amount based on the current amount due. This strategy can help you manage past due amounts efficiently.
- Prorate Based on Past Due Amounts: You also have the choice to allocate underpayments to delinquent loans based on the past due amount. This method can help you catch up on overdue payments systematically.
- Billing Direction:
- When you make an overpayment that equals or exceeds your future monthly payments, you can decide whether you want to be billed for your full monthly payment. This ensures that any overpayment you make is always applied to your current balance, helping you reduce the overall amount you owe.
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