How do you determine what the lowest monthly payment on a loan is?

I have a private student loan. They are telling me that the lowest amount I can pay a month is $95. However in my Application/Promissory Note and Credit Agreement I signed it says: “14. MINIMUM MONTHLY PAYMENT AMOUNT: You agree that your monthly payment amount during the Repayment Period shall be at least $25.00 each month (principle and/or interest) or the unpaid amount owed under this Agreement, whichever is less.” I confronted them about this and they continue saying it is $95. But this sounds to me like I can pay $25 a month. Am I correct?

Asked on September 12, 2010 under Bankruptcy Law, Kentucky


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

From what you have read to me it certainly does sound to me like you have the right to pay the $25 and not the $95 as they are insisting.  Are you speaking with a "regular" customer service representative?  Ask to speak with a supervisor for the purposes of obtaining a name and address.  Ask the supervisor to whom you write regarding the disputed amount.  What you need to do is to send the checks by certified mail and a letter to whomever you are directed stating just what you have stated here and asking them what justification they have for asking you for the $95. You need to copy the portion of your agreement that states the amount here.  You need to them send the payment of $25.  Then I would contact your state attorney general's office and if the loan is from a bank, the state banking commission.  You may need an attorney here.  Good luck.

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