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/biz/ - Business & Finance

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56512484 No.56512484 [Reply] [Original]

I don't understand interest rates on loans.

If I loaned you $70,000 with 15% interest over 50 weeks. You would have to pay me back $80,500 in 50 payments totaling $1,610 per payment. What am I not understanding? Why do the calculators online say I would be only getting back $75,270.12 through payments of only $1,505.40 even though the rate is still 15%? Am I just retarded?

>> No.56512500
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56512500

>>56512484
good dogge

>> No.56513636

>>56512484
Depends on if the interest is being charged in one lump (i.e. 15% of 70k is 10.5k, which gets your 80.5k total), or if the interest is being broken down per pay period (i.e 15% divided by 50 weeks = 0.3% interest per week) which means as the principle gets paid down then there is less money to charge interest on, and thus less total interest charged.

>> No.56513658

>>56512484
interest rates are quoted annualized

>> No.56513674

>>56513636
Forgot to add, you will want to look up an amortization schedule calculator, which will give you a break down of principle vs interest being paid for each payment.