If you’re looking at the amount of each payment and multiplying that amount by the total number of payments, you might be thinking, “Whoa, this is expensive!” However, there are a few important things to know when considering how much your loan will ultimately cost:
- You only pay interest on your loan for as long as you need the money.
- You can pay back your loan at any time without additional fees or penalties.
- The earlier you pay back your loan, the less interest you pay.
To determine the total cost of your loan, it’s important to look at more than interest rate, loan term, and payment amount. You need to consider how long it will actually take you to pay back the loan.
Subsequently, if you’re looking at the APR or annual percentage rate, be sure to understand how APR works on a monthly basis.
For an example of how much you can reduce your total cost by paying off early or making additional payments, visit loopfund.com/cost.
