Are there any regulations regards end of loan payment procedures?
There are federal regulations that state that: As a result it can be assumed that when a loan is paid off, notification should be given to the borrower. There is not a penalty since schools are pretty good about recovering their money. It could be due to a simple human error or glitch in the system. I would email them again confirming that your Perkins Loan had been paid in full, just so you have documentation of it.
If the loan is for a car, or mortgage there is specific paperwork that is processed when the loan payments have been completed. For other types of loans ask the lender, what will they give you regarding the payoff of the loan. Keep this paperwork, in hard copy and electronic form forever. "Let me give you some advice from someone who has experience at both ends - had student loan issues myself and parents ran financial aid department at local university. Quick story of my student loan.  I graduated in debt and could not pay at first due to having kids way too early.  I deferred.  Schools will have rules for deference.  There are also federal guidelines - lets not get specific on this though since these change every year it seems.   So basically there is an initial deferment period in which any student can request for the repayments to be deferred and it is granted.  Then there is an extended deferment.  Here someone has to OK it.  This is really rather arbitrary and up to the school/lender.  My school decided to not extend mine after I filled out a mound of paperwork and showed that even without paying I had basically $200 a month for the family to live off past housing/fixed expenses. Eventually they had to cave, because I had no money so they gave me an extended deferment.  After the 5 years I started paying.  Since my school had a very complex way to pay, I decided to give them 6 months at a time.  You would think they would love that right?  (On the check it was clearly stated what months I was paying for to show that I was not prepaying the loan off) Well I was in collections 4 months later.  Their billing messed up, set me up for prepayment.  They then played dumb and acted like I didn't but I had a picture of the check and their bank's stamp on the back... They couldn't get my loan out of collections - even though they messed up.  This is probably some lower level employee trying to cover their mistake.  So this office tells creditors to leave me alone but I also CANNOT pay my loan because the credit collection agency has slapped a 5k fee on the 7k loan.  So my loan spent 5 years (kid you not) like this.  It was interest free since the employee stopped the loan processing. Point being is that if you don't pay the lender will either put your loan into deferment automatically or go after you.  MOST (not all) schools will opt for deferment, which I believe is 2 years at most places.  Then after that you have the optional deferment.  So if you keep not paying they might throw you into that bucket.   However if you stop paying and you never communicate with them the chances of you getting the optional deferment are almost none - unless school doesn't know where you live.  Basically if you don't respond to their mail/emails you get swept into their credit collection process.  So just filling out the deferment stuff when you get it - even if they deny it - could buy you up to 10 years - kid you not.   Now once you go into the collection process... anything is game.  As long as you don't need a home/car loan you can play this game.  What the collection agency does depends on size of loan and the rules.  If you are at a ""major"" university the rules are usually more lax, but if you are at the smaller schools, especially the advertised trade/online schools boom - better watch out.  Wages will be garnished very soon.  Expect to go to court, might have to hire an attorney because some corrupt lenders start smacking on fees - think of the 5k mine smacked on me.   So the moral of the story is you will pay it off.  If you act nice, fill out paperwork, talk to school, and so on you can probably push this off quite a few years.  But you are still paying and you will pay interest on everything.  So factor in that to the equation.  I had a 2.3% loan but they are much higher now.   Defaulting isn't always a bad thing.  If you don't have the money then you don't have it.  And using credit cards to help is not the thing to do.  But you need to try to work with the school so you don't incur penalties/fees and so that your job doesn't have creditors calling them.   My story ended year 4 that my loan was in collection.  A higher up was reviewing my case and called me.  Told her the story and emailed her a picture of their cashed check.  She was completely embarrassed when she was trying to work out a plan for me and I am like - how about I come down tomorrow with the 7k.  But even though lender admitted fault this took 20+ calls to agencies to clear up my credit so I could buy a house.   So your goal should be:" There are different options here.  Either way, ensure that you have a paper trail of all your payments. When in doubt, speak to a lawyer, there are many who offer free consultations. In the EU, you might be looking for Directive 2000/35/EC (Late Payment Directive). There was a statutory rate, 7% above the European Central Bank main rate. However, this Directive was recently repealed by Directive 2011/7/EU, which sets the statutory rate at ECB + 8%. (Under EU regulations, Directives must be turned into laws by national governments, which often takes several months. So in some EU countries the local laws may still reflect the old Directive. Also, the UK doesn't participate in the Euro, and doesn't follow the ECB rate) You should also be aware that there are banks that do business in the US that do not deal with Fannie Mae, and thus are not subject to the rules about conforming loans.  Here is an example of a well-known bank that lists two sets of rates, with the second being for loans of $750,000 or more (meaning the first covers everything up to that) https://home.ingdirect.com/orange-mortgage/rates It depends on the type of loan.  Fully amortized loans have a schedule of payments don't recalculate as you pay.  If you want to make an additional payment you need to contact the lender to apply your payment toward principle and reamortize the loan.  Otherwise all your additional payment will do is change the amount due on your next payment, or push out your next payment due date. Regarding interest calculation, you owe interest on the principle outstanding.  Say you have a 10 year loan (120 Months), at 5% APR, and a $1,000 payment (this means you borrowed roughly $94,000) Each month the amount of interest owed reduces because there is less principle outstanding.  The reason loans are amortized like this is so the borrower has a predictable, known, monthly amount due. I've been an F&I Manager at a new car dealership for over ten years, and I can tell you this with absolute certainty, your deal is final. There is no legal obligation for you whatsoever. I see this post is a few weeks old so I am sure by now you already know this to be true, but for future reference in case someone in a similar situation comes across this thread, they too will know. This is a completely different situation to the ones referenced earlier in the comments on being called by the dealer to return the vehicle due to the bank not buying the loan. That only pertains to customers who finance, the dealer is protected there because on isolated occasions, which the dealer hates as much as the customer, trust me, you are approved on contingency that the financing bank will approve your loan. That is an educated guess the finance manager makes based on credit history and past experience with the bank, which he is usually correct on. However there are times, especially late afternoon on Fridays when banks are preparing to close for the weekend the loan officer may not be able to approve you before closing time, in which case the dealer allows you to take the vehicle home until business is back up and running the following Monday. He does this mostly to give you sense of ownership, so you don't go down the street to the next dealership and go home in one of their vehicles.  However, there are those few instances for whatever reason the bank decides your credit just isn't strong enough for the rate agreed upon, so the dealer will try everything he can to either change to a different lender, or sell the loan at a higher rate which he has to get you to agree upon. If neither of those two things work, he will request that you return the car. Between the time you sign and the moment a lender agrees to purchase your contract the dealer is the lien holder, and has legal rights to repossession, in all 50 states. Not to mention you will sign a contingency contract before leaving that states you are not yet the owner of the car, probably not in so many simple words though, but it will certainly be in there before they let you take a car before the finalizing contract is signed.  Now as far as the situation of the OP, you purchased your car for cash, all documents signed, the car is yours, plain and simple. It doesn't matter what state you are in, if he's cashed the check, whatever. The buyer and seller both signed all documents stating a free and clear transaction. Your business is done in the eyes of the law. Most likely the salesman or finance manager who signed paperwork with you, noticed the error and was hoping to recoup the losses from a young novice buyer.  Regardless of the situation, it is extremely unprofessional, and clearly shows that this person is very inexperienced and reflects poorly on management as well for not doing a better job of training their employees. When I started out, I found myself in somewhat similar situations, both times I offered to pay the difference of my mistake, or deduct it from my part of the sale. The General Manager didn't take me up on my offer. He just told me we all make mistakes and to just learn from it. Had I been so unprofessional to call the customer and try to renegotiate terms, I would have without a doubt been fired on the spot. Writing a promissory note will be sufficient. Presumably the money will be transferred on or near the date that the loan is signed, and the repayments will follow the pattern prescribed in the note. The IRS is only skeptical of family loans if there is no documentation to support the claim. You may need to specifically state that your extra payments should go towards principal, and should not be considered early payments of future months. "Paperwork prevails.  What you have is a dealer who get a kickback for sending financing to that institution. And the dealer pretty much said ""We only get paid our kickback at two levels of loan life, 6 and 12 months."" You just didn't quite read between the lines.  This is very similar to the Variable Annuity salespeople who tell their clients, ""The best feature about this product is that the huge commissions I get from the sale fund my kid's college tuition and my own retirement. You, on the other hand, don't really do so well.""  Car salesmen and VA sellers." The mortgage I got last year through Wells Fargo explicitly indicates in its terms that excess payment will be considered against future payments (i.e., pay $500 extra in January and you owe $500 less in February) unless indicated otherwise. It goes on to state that with electronic payments you do not get to specify where excess payment goes, so excess payment made electronically always goes toward future payments. If you want to make excess payments toward principal, you must actually send them a check and your payment stub, with the appropriate box ticked.  This won't be very different for other major banks, I wouldn't imagine. You will be best to cancel the original instruction first, as you will have to wait for any pending payments to be received, as the banks will not entertain multiple refunds. After this can be confirmed the account will simply show a credit which you ask for.  Many lenders/banks process these type of transactions after a period of time ie 30 days and there will be no way to speed this up, so the sooner you act the better.  When you contact the bank have bank details for the payment(they might transfer externally fingers crossed), or you may receive a cheque in the post.  Try to avoid complicating the matter with changes of address and ringing before you have cancelled the instruction etc if possible. If you selected a mortgage that allows additional payments to be credited against the principal rather than as early payment of normal installments, them yes, doing so will reduce the actual cost of the loan. You may have to explicitly instruct the bank to use the money this way each time, if prepay is their default assumption. Check with your lender, and/or read the terms of your mortgage, to find out if this is allowed and how to do it. If your mortgage doesn't allow additional payments against the principal, you may want to consider refinancing into a mortgage which does, or into a mortgage with shorter term and higher monthly payments, to obtain the same lower cost (modulo closing costs on the new mortgage; run the numbers.) Disclaimer: I am not a banker nor a lawyer. I am unaware of the exact term in English, there is a process where you can ask for a reversal of a payment if it was made in error and your former employer should have made use of this. After a month though, I'm fairly sure the period of eligibility for this reversal has passed.  As far as I am aware there is no point in time where it becomes ok for you to take this money. If you wish to close the account I would advise contacting the company and obtaining their payment details so you can transfer them the money and subsequently close the account. Keep in mind that lenders will consider the terms of any loans you have when determining your ability to pay back the mortgage. They'll want to see paperwork, or if you claim it is a gift they will require a letter to that effect from your relative. Obviously, this could effect your ability to qualify for a loan.