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If I pay the whole amount within a year and its at 4% interest will they just charge me for a year even though its scheduled for 5 yrs?

4% for 5 yrs is 1,500 and I think thats to much so I want to pay the 14,000 within a year so it wont go that much higher but if I pay it at nine months will I get credit for the last 3 months remaining or will it still be the whole 300 dlls of interest extra? In other words do they charge interest by year or by months like if I pay it in 6 months they'll still charge me the interest for a whole year right? Sorry if I dont make sense..

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Asked by Anonymous at 3:47 AM on Oct. 12, 2009 in Money & Work

Answers (3)
  • This depends on whether or not there is a penalty for prepayment.

    Answer by rkoloms at 7:44 AM on Oct. 12, 2009

  • Ask the lender for a payoff amount. Typically, with no prepayment penalty, you save money by paying early. There is nothing to charge interest on if the principal is paid off.....

    Answer by halfpint_ny at 8:12 AM on Oct. 12, 2009

  • It all depends on the terms and agreements of the loan. Sometimes loans penalize you a fee for paying off early to avoid interest. You need to check the loan paperwork to see how the interest is applied. I've had loans in the past that were calculated by the year, month or even to the day of that month. IE: 27 vs. 31 days in a billing period.

    Answer by momtotrips at 8:31 AM on Oct. 12, 2009

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