My auto loan is based on a simple interest calculation, how does that work?

It says, %26quot;The interest is calculated daily. The interest charge is calculated based on the number of days in the month that the principal is actually outstanding. This could differ from month to month depending on when you make your payment.%26quot;

Is it better to pay earlier in the month then?

My auto loan is based on a simple interest calculation, how does that work?

There is simple interest and then there is precomputed interest. They are the exact same thing if you pay the exact payment due when it is due.

Simple interest is better for the consumer if you pay more than your regular payment each month because the interest rate is applied to the outstanding balance. SO if you have a lower balance, less of your money is going to the interest payment.

It helps slightly if you pay before your due date each month but it helps much more if you increase your payment.

My auto loan is based on a simple interest calculation, how does that work?

I can't really answer yor question but I was wondering the same thing and I called my auto finance comany and they sent me a paper explaining it ~ I understand it but can't really explain it to you

Try calling your auto finance comany

My auto loan is based on a simple interest calculation, how does that work?

Most loans are simple interest. It does not matter when you pay as long as it is rec'd before the due date. However, if you pay an add'l sum each month and advised them you want it applied to the principle, it would shorten the life of the loan If for example you take out a 5 year loan, you will pay 70% of the interest on the first half because that's how the banks make their month. That also goes for 1st and 2nd mortgages.