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The principal amount on a $ 250.00 loan

Date: Thu, 09/06/2007 - 13:24

Submitted by Tweety71
on Thu, 09/06/2007 - 13:24

Posts: 2061 Credits: [Donate]

Total Replies: 19


how do you figure that out? Also the finance charge.......Thanks


Depends whether the loan is simple interest (daily interest) or precomputed (Rule of 78ths). I think most PDLs use simple interest...

Basically, under a simple interest method, you are charged one day worth of interest for each day that elapses in between payments.

To calculate a day worth of interest is relatively simple. First we need to take the apr (Annual % Rate) and turn it into a Daily rate ... simply divide the APR by 365 ... 684.38/365 = 1.875% per day. Then multiple the daily rate times your principle balance ... 1.875% * $250 = $4.69/day interest.

Then multiple that times the number of days you will have your loan open (14 days?) --- $4.69 X 14 = $65.66.

If you loan term was 14 days, then you should only be paying $65.66 interest. However, $4.69 X 16 is right at $75, so maybe your loan term was 16 days not 14.


lrhall41

Submitted by DebtCruncher on Fri, 09/07/2007 - 16:27

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