Wednesday, May 26, 2010

When you get a car loan, you are charged your APR..?

but what is the daily periodic rate? Does it mean that they charged you for the loan and on top of that they charge you more?



When you get a car loan, you are charged your APR..?

divide the APR by 365 to get the daily periodic rate. They are the same rate, you aren't charged twice. If your APR is 6% (.06), your daily periodic rate is .000164. Multiply your outstanding principal balance by the daily rate to find out how much interest you are charged each day (per diem). Based on a $10,000 balance, your per diem is $1.64. If you make a $100 payment on the 31st day, $49.20 (1.64 x 30) of your payment will be applied to interest and the rest to the principal.



This is why you should try to pay more to principal whenever you can. The lower your principal, the lower your per diem or daily interest.

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