NO, you should actually pay LESS interest over the period of the loan. You will actually pay it off sooner.
If you are paying more then you need to specify to the dealer that you would like all overpayments to go twards the princeple not the interest which by lowering the princeple will automaticly lower the interest.
Compound interest is when interest is charged on the principal plus the interest. An example is a credit card debt. If you carry a balance from month to month you are charged interest on the total amount owed including the interest from previous months. Simple interest is calculated on the amount borrowed over a fixed amount of time and does not charge interest on the interest.
Banks do not offer compound interest on the money deposited into the savings accounts. They offer only simple interest. However, this interest is compounded every month or quarter in order for the customer to gain full benefits of the same. Ex: let us say you hold Rs. 10,000/- in your bank account and as per the prevailing interest rate of 3.5% for a savings account, your interest for the first month will be 29.17 rupees. If the interest is compounded every month, the principal amount used for calculation of interest for the second month will be 10,029.17/- and the effective interest you earn the second month will be Rs. 29.25/- this way the interest will get added up with the principal amount every month to earn a extra few rupees into your account as interest.
You can use the below formula: P - The amount of money you deposited N - No. of years deposited R - Rate of Interest Offered by the bank. Interest = P * N * R / 100 Substitute the amount you want to deposit and the rate of interest on your CD in the formula. Also, here you must take N as: 0.0833 because you want to calculate every month. You'll get the interest you'll get every month.
simple(interest is earned on the original principal) $100 earning 10% per month with earn $10 every month and compound(interest is compounded every set amount of time e.g. monthly and a new principal is derived) $100 earning 10% per month compounded monthly will earn $10 the first month after which it is compounded making the new principal $110 the next month will earn $11 and so on
When you use a credit card to purchase something, you are making yourself a loan through the credit card company. You have to pay the company back for this loan at the terms you have agreed to when you signed the application for the card. If you make a payment in full when you receive your monthly bill, there will be no additional amount due, no interest, and usually no handling fee. When you make a partial payment, whether it is the minimum due, or a larger amount, the company will charge interest, and perhaps a monthly fee, which will be added to the next monthly bill. As long as the amount you pay is less than the amount due, you will continue to be charged interest every month, based on the balance remaining. If you pay the entire amount due at the end of the month, there will be no new interest charges. There might be a small amount of interest on the previous balance. Often, if you call the company and point out that you paid the previous bill in full, they might waive the final interest due.
A fixed interest rate mortgages means that one pays a fixed amount of interest each month which is the same. The benefits are that one always knows how much is being paid as it is not variable. The amount depends on the amount of loan borrowed and the length of the loan term. If the interest rate changes, then this will not affect the amount being paid each month.
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