Method and apparatus for loan repayment
First Claim
1. A method of repaying a loan account comprising the steps of:
- establishing a debit balance in a transaction account; and
, performing the following steps over a regular time period;
(i) repaying a portion of the debit balance with income;
(ii) borrowing from the transaction account to pay expenses, the expenses including a payment on the loan;
(iii) borrowing a prepay amount from the transaction account and using the prepay amount to prepay a principal balance of the loan account.
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Abstract
An efficient loan repayment mechanism applicable to residential property mortgage loans, or any other kind of loan, such as vehicle loans, home improvement loans, etc. Advantageously, the system and method may be utilized to more quickly repay a loan even without any increase of the out-of-pocket expense from the borrower. Preferably, a transaction account is established such that income may be immediately diverted towards prepayments of the loan, thereby decreasing the remaining principal and the associated interest accrual, and the transaction account thereafter is used to pay for ongoing expenses, typically generating or maintaining a debit balance in the transaction account. Because the principal balance of the loan is reduced as soon as possible, eliminating the interest accrual for that portion of the principal, while the payments of expenses occur relatively later (or even intentionally delayed), a net decrease in the interest expense may be realized, even if the interest charged on the transaction account debit balance is greater than the interest rate on the loan being repaid.
93 Citations
26 Claims
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1. A method of repaying a loan account comprising the steps of:
establishing a debit balance in a transaction account; and
, performing the following steps over a regular time period;
(i) repaying a portion of the debit balance with income;
(ii) borrowing from the transaction account to pay expenses, the expenses including a payment on the loan;
(iii) borrowing a prepay amount from the transaction account and using the prepay amount to prepay a principal balance of the loan account. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17)
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18. A method of repaying a loan account comprising the steps of:
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establishing a transaction account to receive direct deposits of income and to disburse payments for expenses;
establishing and maintaining a debit balance in the transaction account by borrowing a prepayment amount from the transaction account to prepay principal to a loan account;
depositing income to the transaction account to reduce the debit balance in the transaction account;
disbursing money from the transaction account to pay expenses, thereby increasing the debit balance. - View Dependent Claims (19, 20, 21, 22, 23, 24, 25)
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26. A method of repaying a loan account comprising the steps of:
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establishing a transaction account to receive deposits of income and to disburse payments for expenses, the transaction account having an effective transaction account interest rate;
receiving user income data and user expense data;
receiving user loan data, including a loan interest rate; and
,in response to the user income data and user expense data, determining future loan prepayment dates and future loan prepayment amounts to be made from the transaction account such that the effective interest rate of the transaction account is below the effective interest rate of the loan account.
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Specification