I know all companies differ, however, if I wanted to pay off a loan that I have had for a year [it's a five year loan] is there a method to working out how much I would pay them including the interest they charge for early pay-out?
Thanks!
2007-02-01 23:20:04 · 6 answers · asked by gigi s 2 in Business & Finance ➔ Credit
I have to make some assumptions here for your calculation, but here's how it works:
Take your remaining principal (I'll use $10,000 to make the math easy). That's the first thing you have to pay off. Let's say your annual interest rate is 5% (or 0.05). Now we have to figure out if your interest is calculated monthly or daily - probably daily, so we'll go with that. So you take the annual interest rate and divide it by 365 to make it daily (or by 12 to make it monthly).
0.05 divided by 365 is 0.00013698630 (the last 8 digits repeat).
Multiply that figure by your principal.
10,000 multiplied by 0.00013698630 is 1.3698630
Now we can round that to 1.37. So the daily interest is $1.37.
Now you have to choose a payoff date. Let's say you have a payment due March 1. If you choose a payoff date of March 10, that's 9 days later. So you would multiply your daily interest (called a "per diem") by 9 days.
1.37 multiplied by 9 is 12.33
So your payoff would be the remaining principal plus the interest calculated above.
10,000 plus 12.33 is 10,012.33
Now for any prepayment penalty, if it's a flat penalty, just add it on. If it's an percentage calculation, you'll have to multiply it by the remaining principal, or multiply it by the remaining principal minus an allowable percentage. It should all be in the note you signed.
Your lender should also be able to provide you with a payoff quote good through a certain day. They should do it for free.
2007-02-01 23:35:52 · answer #1 · answered by thefinancepirate 2 · 1⤊ 0⤋
If you are looking to pay your loan off, make it simple, call the bank and request a payoff good through the date you feel gives you enough time to get the payment there so your payment covers the daily per diem. Ask for the payoff to be faxed to you so you have confirmation. The payoff will have your breakdown of principal, interest, and daily perdiem. If there was a pre payment penalty for paying it off early it would reflect on your payoff so just ask the representative when requesting the payoff what it is ahead of time as they can normally verbal your payoff amount before faxing it. It really depends on what time of loan you have. For example, a line of credit may charge you $300, but personal loans usually dont have a pre-pay.
2007-02-02 00:06:47 · answer #2 · answered by Summar 1 · 0⤊ 0⤋
Contact the company you have a loan through and ask for a total payoff including the prepayment penalty if there is one. They may say they will only send that to you in the mail, but whatever it will be there shortly after that.
2007-02-02 02:41:30 · answer #3 · answered by Brian K 2 · 0⤊ 0⤋
They shouldn't charge you ANYTHING for lump sum early pay out.
You should only pay the principal. No interest at all.
(Unless you signed a contract for a really bad loan, then it will be in your contract and you will need to read that.)
2007-02-01 23:23:42 · answer #4 · answered by tabulator32 6 · 0⤊ 0⤋
some banks charges fees for pre payment
2007-02-01 23:50:00 · answer #5 · answered by Anonymous · 0⤊ 0⤋
pay in instalments wise
2007-02-02 00:12:02 · answer #6 · answered by PRASSANA K 3 · 0⤊ 0⤋