When I signed up for a Caribbean student loan to fund my college education, I thought I made a simple agreement.
I know, now, that it was everything but a simple financial obligation, and after my own lender messed up my student loan, I identified 10 ways your Caribbean lender is (probably) robbing you blind.
Non Disclosure of Policies and Procedures
Although you signed and agreed to a promissory note for your student loan from your Caribbean lender, details on its policies for applying principal payments, the process to apply for deferment, what happens to interest that builds up during your in-school or post-graduation grace period and when you will have an opportunity to keep outstanding interest from being added to your loan’s principal balance, are not disclosed to you in writing.
The result: You lack a full understanding of what you agreed to, and your lender makes more money
Mysterious Account Transactions
When you signed up for a student loan, you expect transactions to involve disbursements of loan funds, accrual of interest, loan payments and not much else. Yet your Caribbean lenders apply mysterious fees without much explanation, set payments aside to phantom holding accounts, record disbursements you did not request, and fail to apply payments to your loan account even after the funds have cleared from your personal bank account.
The result: You pay more in interest & fees, and your lender makes more money
Not Issuing Regular Statements
Even though transactions occur on your student loan account monthly, you don’t receive regular statements. Most times, it’s impossible for you to know what the status of your loan is, whether your payments were properly applied, and you can’t even be sure if your principal balance is on an upward or downward trend.
The result: You’re confused about what you owe, and your lender makes more money
Limited Access to Account Information
You’ve tried to get up-to-date information about your account, but experience delayed responses and if your lender offers online account access, the account information is hard to discern. Getting a clear picture of what you owe in terms of outstanding principal and interest balances, or how many payments you have remaining, seems out of reach.
The result: You can’t stay on top of what’s happening on your loan account, and your lender makes more money
Outdated Methods of Payment
Because the options to pay your student loan are cumbersome, your on-time payments are delayed and show up on your account, days past the due date. Your lender’s idea of innovation is an online payment option that involves the multi-step process of downloading a form and submitting a copy of multiple forms of identification, to make a payment by credit card or by directing you to third-party bill payment platform, whose system has with varying payment delivery times.
The result: You get hit with late fees and default notices, and your lender makes more money
Losing Track of Payments
You submit your monthly payments using the options available to you, then months (or even years) down the line, when you are able to get a copy of your loan statement, you realize that multiple payments are missing or not properly applied to your account. Your loan’s principal balance, that you thought that you were chipping away at with each payment, is stagnant or reduces only slightly.
The result: You end up repaying your loan for a longer period of time, and your lender makes more money
Related Article: How I Shaved $6,000 Off My Caribbean Student Loan After Making $4,000 in Interest Only Payments
Capitalization of Interest Without Prior Notice
Capitalization of outstanding interest on your student loan has a huge impact on the total cost of the debt to you and the size of your monthly payments. Yet, your Caribbean lender fails to inform you of when it takes place, and what happens to outstanding interest after capitalization.
The result: You pay interest on top of interest, and your lender makes more money
Withholding Extra Payments
After making room in your budget to submit extra payments to pay down your student loan faster, your receipts fail to reflect how it was applied to your account. You contact your loan officer, and you are surprised to find out, that although the money for your extra has left your own personal bank account, it has never made it to your loan account.
The result: Your loan accrues more interest than it would if your extra payments were applied, and your lender makes more money
Not Warning About Interest-Only Payments
Although it’s easy to tell when your principal balance stays the same after on-time payments, it’s harder to figure out why. You are totally unaware of when your loan effectively becomes an interest-only loan and receive no warning from your Caribbean lender when your loan negatively amortizes.
The result: The total cost of your loan can potentially double over time, and your lender makes more money
Subpar Customer Service
On top of the inefficient operations of your Caribbean lender, the customer service is the worst. In order for you get a minimum level of service, you have to contact a friend of your family who works at the bank directly. Other than that, the best case scenario is to endure frustratingly long hold times, unanswered emails, and unresponsive and rude staff.
The result: You are repeatedly worked up by the low level of service, and your lender makes more money
All these practices work together to bring more profits to your Caribbean lender at your expense. Make sure to use these 7 steps to keep avoid these lender mishaps and cut the costs of your Caribbean student loan.