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Early payment of loan
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29-11-2009 9:23pm#1I've been paying off a bit extra on a variable term loan, anytime I can. Is this actually saving me anything as the monthly repayments include interest which was calculated on the 5 year re-payment plan or will it just mean I pay the original amount agreed but quicker?
I've been trying to calculate what the interest added every 3 months would be if I just made the scheduled payments vs the actual interest added with the payments I am making but there doesn't seem to be a handy formula out there and I am completely lost.
It seems very complicated to calculate interest on an account. All the financial advisors say check your statements but I wouldn't have a clue if interest had been calculated correctly or not.
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It seems very complicated to calculate interest on an account. All the financial advisors say check your statements but I wouldn't have a clue if interest had been calculated correctly or not.
It is very complicated and the financial advisors who say this probably dont have a clue themselves.
The interest is calculated on a daily basis basis on the amount owed on the loan and the interest rate. The interest is then added every three months based on these calculations. Because its a variable loan the interest can change all the time.
It is possible to work it out but as I said its very complicated.
Also note that the more you pay off the better as the interest added every three months will be less.0 -
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