Every loan has an interest rate and it keeps fluctuating depending upon the type and tenure of the loan. And that is the reason that people get confused when it comes to interest rates. The solution lays in first understanding the type of interest that is being calculated and then doing the math to know how much you’ll need to pay.
Knowing whether you are being charged simple interest or compound interest is important when you are repaying the loan. When you apply for a car title loan, you might be wondering about how the lenders calculate the interest rates. If you want to know the total amount of interest that is payable at the end of the loan term, you’ll need to know the details of the terms and conditions.
You need to understand the difference between simple interest and compound interest. Simple interest is the amount that is charged over the principal amount that you borrow. You will not repay more than the principal and the interest that is charged. While on the compound interest loan, the interest is constantly accrued on the original principal. When you know and understand the difference between them, you can judge which loan works for your requirements.
You don’t have to be a math wizard or CPA to understand and calculate the interest levied on loans. With a host of online calculators available on various title loan websites, you can check it with different amounts to know how much interest you’ll be charged. Additionally, you can talk with a loan officer or a lending company representative to know the amount that would be charged on a daily basis. Another simple way to find out the interest rate is by simple calculation. Take the balance, which still needs to be paid and do a simple multiplication by the interest rate. This will help you figure out the interest rate and the due payment. When you understand how much you are paying or still need to pay, you’ll be able to budget and pay it all quickly to avoid late penalties and fees.
Though auto title loans are given for a period of 30 days, if you are unable to pay it is re-instated as a new loan with the same interest. As one of the easiest loans to be approved for, you can walk out of the lenders place within 30 minutes as all they need to see is the car, title and the your employment proof so that you can repay the loan. It is one of the best loans to take when you are in a financial emergency.