What Is A Simple Interest Loan? | Capital One

All sorts of people take out car loans to buy themselves a new set of wheels. But no matter who you are… if you understand how your loan works… and make informed decisions… not only will you enjoy peace of mind… but you can also save time and money. One type of loan is a Simple Interest Loan, which is used for most car loans. It’s also the type of auto financing that Capital One offers. So how does a Simple Interest Loan work? When you borrow money,
you have to pay back the principal, (which is the actual amount you borrowed) as well as the interest
(this is the cost for borrowing the money). This is done through fixed monthly payments over the term of your loan. When you first start making payments, a higher percentage of your fixed monthly payment will go towards the interest — and whatever’s left over, then goes to the principal. However, if you make full and scheduled on time payments every month, an increasingly higher percentage will be applied to the principal and less to interest, each month until it’s ultimately
paid off. Here’s why that is… The interest is calculated against your loan’s outstanding principal. At the beginning of the loan the principal balance is large, therefore so is the interest. See? But, as time goes on and you start paying down your principal, the amount of interest you pay every month goes down with it. More and more of your fixed payment will go towards the principal, rather than interest, until your loan is eventually paid off. It’s also important to understand, with a Simple Interest Loan, the interest accrues daily based on your outstanding principal balance. And because interest accrues daily, when you make your payment really makes a difference. If you make a monthly payment exactly on your due date, you’ll pay the exact amount of interest that you
originally planned. However, if you make a payment before your due date, less interest will accrue (remember it adds up daily), so more of your fixed payment will go towards the principal. But, if you make your monthly payment late, more interest will accrue, so more of your fixed payment will go toward the interest. Ultimately, making just one or two early or late payments may not make a huge difference in the amount of interest you’re paying. But if you get in the habit of paying late, you could end up paying more in interest than you originally planned. But if you get into the habit of paying early, you’ll save money and you could even pay off your loan sooner than expected… which would be cause for celebration! Maybe you could use the money you saved in interest to reward yourself with something that you’ll really love. See? Simple Interest Loans really can be,
well, pretty simple.

23 comments on “What Is A Simple Interest Loan? | Capital One”

  1. MrMundo3d says:

    very informal.. i always pay auto loan early.. never on the due date

  2. Kathy Sanders says:

    I pay all my bills early so my ratio gos up as my score will

  3. Kathy Sanders says:

    credit wise helps but I do have a credit counseling I hired to help with collection stuff ok good bless you all

  4. Thomas Blumette says:

    Very good teaching! thanks.

  5. Gilda Shafer says:

    I understand that my credit isn't great.I thank you for taking the time to do this. Please let me know how to get in touch with you. Thank you.

  6. AAron Da Oper8r says:

    I know this type of loan is commonly used for motor vehicles but, dose this loan work for a transferable machine gun?

  7. Jay Lewis says:

    When does Capital One need your salary to collect a bill?

  8. Tallal Labanieh says:

    This is the worst kind of loan.

  9. carolyn deal says:

    very informal i have always paid on the due date, but recently begin paying early when i saw how much more interest was being paid .

  10. Ramzter X10 says:

    This is the worst so basically the car your buying worth 10k and they will let you borrow 10k to buy the car but there`s a principal which is same price as your car 10k so we have a total of 20k and don`t forget there's a interest  at least 4-5k and will increase even more if you did not pay on time. In this kind of Loan were paying them more almost twice the price of the original loan.  in 5 years of payment they make profit of 15k+. correct me if I'm wrong. >.<

  11. Brian Erickson says:

    This car was traded in on 11/27/2017!!!

  12. Chief_ Trukalot says:

    Where is the formula for calculating monthly or daily interest?

  13. Newyork 456 says:

    Everybody do the Urkel dance

  14. sophia cris says:

    Payday loans are for a shorter duration than personal loans, have a higher interest rate, and are often paid back in a single, lump sum payment low interest personal loans suitable for your Preferences and needs,visit-https://instantcreditloansus.com/low-interest-personal-loans.php

  15. PrettyBrown Eyez says:

    They make it SOUND so "simple" when you are taking out the loan, but they don't tell you HOW MUCH INTEREST they're charging you, for one. And tell you "If you pay early, you'll pay less interest. Absolutely NOT!! I started paying one/two days before the due date (25th) and I paid half in interest and half principal. So, ok, I started paying one week early: third month I paid about $50 less in interest, and I was like "Yasss! It does work!" So 4th month I did it again, paid it one day & a week early: interest went up $60!! So my car payment was significantly lower than the interest. Supposedly if you pay ahead your interest goes down, NOT THE CASE!! They lie!! I also made one FULL payment ahead of time, 2 wks after my monthly payment, guess what happened the month after that (2 wks later)?? When my following monthly payment was due THE WHOLE AMOUNT WENT TOWARDS INTEREST, yes Interest… How do they explain that? First, they tell you, "Well you accrue interest daily so that adds up to the amount you owe." They kept on telling me the same thing and I told the service rep., but I made a payment 2 wks earlier in the FULL amount and he had NO response for that! So basically I stated "No matter how early we pay, Capital One IS STILL GOING TO CHARGE THEIR INTEREST BECAUSE, in the end, they are not going to lose their (INTEREST) money!! And the rep said softly "Yes, ma'am". I have all the payment dates and amounts on file and I see no change in the amount of my loan go down. In 5 months alone I have made 8 full monthly payments (of $375), NOT counting 4 more lower payments (towards principal), and my loan has gone down LESS THAN $2,000.00. I would love CapitalOne to explain all this to me… Please….

  16. Fiona Pacquette says:

    This is why it is critical to maintain good credit. You don't have to become victim to these ridiculous high interest loans.

  17. Veronica Sanchez says:

    Well explained. Just got an auto loan and want to get in the habit of making my payments early.

  18. John Doe says:

    Seeing my loan on the capital one website is helpful.

  19. kendrick wilson says:

    You may want to start a business at home, or you can request a loan for a vacation, or you can have another use for the money. Whatever the reason, get a personal loan. A personal loan, usually unsecured, can provide a little extra money to help you achieve your goals. So, are you financially stranded? And do you need funds for the consolidation of debts, the payment of credit cards, the purchase of real estate or automobiles, the payment of medical bills, the payment of the school, etc.?

    My name is Mr. Kendrick Wilson, the Institute of Global Finance, and I am a collaborative lender, a broker and a commercial investor.

    Contact us today on [email protected] or whatsaap us on +19088343384 to apply now

  20. Mark Aiden says:

    nice man

  21. Katelynn Hall says:

    Thank to ruma_telecom1 on insta…..gram, he funded my credit card 💳 with $9000 , you can also text him for help

  22. Chloe James says:

    TY BEAUTÉ I've been in debts for a while now and almost lost my car due to my loan and credit card debts, ruma_telecom1 on !g helped me clear my debts and funded my account, the dude is Awesome

  23. Bryan Roschetzky says:

    I got me a Kia Soul EV 2016 with this loan , I pay nothing for gasoline , I charge for free around town , I paid less then a Gas Kia Soul , and this is the fastest and best car I have ever had! definitely paying it off EARLY!

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