Costs of borrowing: flat price, month-to-month remainder and interest rate that is effective

Costs of borrowing: flat price, month-to-month remainder and interest rate that is effective

05 Nov 2018 | 4 min. Look over

Look beyond the interest rate that is advertised. Read about several types of loans and exactly what facets affect exactly how interest that is much’ll wind up spending.

Key takeaways

    Loans are not money that is free must be repaid with interest. Often, you spend more interest for a loan with an extended tenure compared to one having shorter tenure. Utilize the effective interest to compare different loans getting the rate that is best. Check out the payment schedule before enrolling.

Before you take down financing, consider the interest repayments. Independent of the interest, look at the processing fees, appropriate expenses along with other fees because of belated or non-payment.

Keep in mind, for the amount that is same, you spend more interest for an extended loan duration compared to a reduced loan duration.

Exactly how interest is calculated

Not totally all loans work the way that is same. Read about flat and rest that is monthly, and exactly how they affect interest calculations.

Flat price

With a set price, interest repayments are determined in line with the loan amount that is original. Read more of this post