With simple interest loans, interest is calculated based on the amount you still owe.
Here's how your payment works:
- First, a portion of your payment covers the interest that has built up since your last payment.
- The rest goes toward reducing what you borrowed (the principal).
At the beginning of your loan, more of your payment goes toward interest because your balance is higher. If you can pay more than your regular monthly payment, even just a little, you can lower your loan balance faster and save money in the long run.
Your interest rate is capped so you will never pay more than your agreed upon amount.
For more information on how payments are applied, see "What kind of loan do I have with Above Lending?"