The interest on your loan is calculated using a fixed interest rate, and payable on the loan balance owing on your loan.
MoneyPlace calculates interest on a daily basis so that you pay less interest if you make extra payments on your loan or choose to pay it out early.
For example, if you have borrowed $10,000 from us and your interest rate is 8.00% p.a, then the daily interest will be $2.19. This is calculated as follows:
= $10,000 x (.08/365) x 1
= $2.19 per day
MoneyPlace collects the interest when you make your monthly scheduled repayments on the loan.
How much would I save if I made an extra repayment on the loan?
The amount of interest you will save depends on how much you put towards reducing the loan balance. For example, if you made an extra payment $500 towards the loan, your interest would be calculated on the $9,500 balance owing on the loan. The amount of interest you pay changes as the balance of your loan changes.
You would pay a reduced amount of $2.08 interest per day.
= $9,500 x (.08/365) x 1
= $2.08 per day
You would save 11 cents a day. Over 30 days, you would save $3.30.
How is interest charged to the loan?
Interest is charged each month on the anniversary of the loan. The interest is added to the loan balance.