dumb loan repayment question

Not unless you have crappy terms to that loan. I took out a similar size 72 month loan and paid it off in about 6 months and I know for sure I didn't pay 6 years worth of interest in 6 months.

You would just owe 45 days of interest. Take your balance, multiply by interest rate and divide by 365 that is your daily interest charge. You don't have to keep it 45 days that is when your first payment is due. You can pay it off once the bank creates your loan, that usually takes about 10 days.

No, interest is calculated each month based on the current principle. So you pay whatever the balance is, + the last months interest and the loan is done. Just paid mine off last week after 5 months of payments, bank closed the account and now I'm just waiting for the title.

nixon said:

I was just wondering how the loan works if I pay it all off in a lump sum? Is the interest already factored in to the principle? The finance dude showed me that if I was to technically pay it all off after the mandatory 45 day wait period I would pay only an extra $33 (I think it was 72 @ 2.56% for ~20k loan). Does this sound right?

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Interest only accrues on the outstanding balance. If you look at your monthly statement, it'll explain how much the daily interest is.

ok thanks guys that's a relief. appreciate the simple explanations

IMO, best way to dig in and understand how loans like this work is to build your own amortization schedule excel sheet. then you can play around with it. If you want want to start with PM me your email address.

SoliDeoGloria said:

IMO, best way to dig in and understand how loans like this work is to build your own amortization schedule excel sheet. then you can play around with it. If you want want to start with PM me your email address.

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Or you can just google it. Lots of web calculators out there.

To make it easy to understand, say your rate is 12% and your balance is 10k (I know these numbers aren't realitstic).

The interest you pay on the first month would be 1% (12% / 12 months) of 10k = $100, leaving the rest to go to principal. Then the next months interest will be 1% of that remaining balance.

Like most have said, should be countless sites with amortization tables and calculators out there.

I think people who do not have a lot of money are familiar with this situation take a car on credit and then suffer paying off the loan for years so that this would not happen there are special sites that can consult you in the field of loans mortgages and much more .I had the same problem I almost took the car on a large loan but I was lucky I came across the website Mortgage Advice Cardiff on this site you can consult about mortgage loans a lot of other things .The first consultation is absolutely free . Those who have a problem where to get a choice must contact them they adapt to you and your situation .The site doesn't make sense to advertise because it doesn't want to lose its reputation. I recommend this site to everyone because this site is not the first year on the market.

KelvinMater said:

I think people who do not have a lot of money are familiar with this situation take a car on credit and then suffer paying off the loan for years so that this would not happen there are special sites https://paydaysay.com/best-credit-repair-companies/ that can consult you in the field of loans mortgages and much more .I had the same problem I almost took the car on a large loan but I was lucky I came across the website Mortgage Advice Cardiff on this site you can consult about mortgage loans a lot of other things .The first consultation is absolutely free . Those who have a problem where to get a choice must contact them they adapt to you and your situation .The site doesn't make sense to advertise because it doesn't want to lose its reputation. I recommend this site to everyone because this site is not the first year on the market.

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Thank you for sharing this information. But I think that it is better and safer to get a loan through a dealer.

dotson07 said:

Thank you for sharing this information. But I think that it is better and safer to get a loan through a dealer.

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I'd like to pick your brain on why it is better and safer? I always shop my loans even if it originated from the dealer. Though I did take advantage on a new car purchase where the loan was virtually free, in that there was no down payment and the APR was 0.9%. That was a pretty good deal.

nixon said:

I was just wondering how the loan works if I pay it all off in a lump sum? Is the interest already factored in to the principle? The finance dude showed me that if I was to technically pay it all off after the mandatory 45 day wait period I would pay only an extra $33 (I think it was 72 @ 2.56% for ~20k loan). Does this sound right?

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You'll need to check your terms, but most loans today allow you to may extra principle only payments, or to simply pay it off early. These will be defined in your loan agreement paperwork.

That said, 100% of the loans I have had for my cars, and my house, allow for both principle only payments, and early pay-off.

If you pay it off, you will still have paid the interest that accrued, along with any one time loan costs.

If you want the best rates, look to Credit Unions. I usually find that Alliant Credit Union (and others) beat the more mainstream loan companies.

When I was buying my 2nd RS, the best the dealer could offer me was 3.25%, despite me having a Credit score over 800, and being in the best tier. Alliant Credit Union beat them with a 2.75%, so half percent better.

Course, now, interest rates are sky high and the 'best' on can usually hopeful is maybe 5%, but more likely 6-7% APR.