What a loan costs, and why the advertised rate is not it LOAN
A flat rate is charged on the whole amount for the whole term, and you do not have the whole amount for the whole term. Five per cent flat is nine point seven effective.
The loan
Where the fee goes changes the answer. Added to the balance, you repay more; taken out of the advance, you receive less. Both raise the true rate and neither shows up in a headline figure.
What it comes to
Overpaying
The schedule
The working
How it works
That is why 5 per cent flat costs about as much as 9 per cent on a normal loan. LOAN works out the true rate, the repayments and the total cost of a loan, so you can compare two offers on the same basis. Your lender's figures may differ slightly, and this is not financial advice. The numbers stay in this tab.
Doing this often? OBSCURA Books keeps a business's books, loans included, on the balance sheet beside the bank, invoices and VAT. On its own, US$4 a month; with everything else, US$9 a month or US$79 a year. 7 days free.