What is the difference of a simple loan & a daily simple loan?
A simple interest loan is a loan with a flat interest rate that is not compounded. It is usually expressed as annual rate. A daily simple interest loan would have the interest expressed per day. For example, a 10.95% annual rate on a simple interest loan would be equal to a 10.95/365=0.03% daily simple interest loan. Assume a loan balance of $5000. In a 30 day month, the interest charge would be $1.50 x 30day = $45.00. If you paid $45.00, the principal would remain at $5000. If you paid $85.00, the principal owed would decrease to $5000 – ($85 -$ 45) = $4,940 and the interest the next 30 day months would be $44.46. If you are paying double the amount due, and are designating the extra amount as “To Principal Only”, you will pay off the loan early. You may want to double check your math.
