Financial People

[bob4432]

i am not good a finances but this does not make sense to me - a friend has a loan for ~$4200 @ 5% and pays like ~$30/mo in interest, how is that (i didn't believe her but she showed me the paperwork)?

shouldn't it be like $17.50/mo for interest?

 

[NutBucket]

Compound interest friend. Do the math

EDIT: On a loan you'll always pay more interest up front and as time goes on more and more money will be applied towards the principle. The interest you pay per month is not fixed.

 

[vi edit]

How many months?

 

[bob4432]

Originally posted by: vi_edit
How many months?

not exactly sure...sorry

 

[mugs]

4200 * .05 / 12 = 17.5... so yes, she should be paying $17.50 per month. There must be something she's leaving out.

 

[vi edit]

Originally posted by: bob4432

Originally posted by: vi_edit
How many months?

not exactly sure...sorry

Actually I just did the math. Month's shouldn't matter. She must have got screwed and signed away on one of those front loaded loans where you pay interest up front.

 

[bob4432]

Originally posted by: vi_edit

Originally posted by: bob4432

Originally posted by: vi_edit
How many months?

not exactly sure...sorry

Actually I just did the math. Month's shouldn't matter. She must have got screwed and signed away on one of those front loaded loans where you pay interest up front.

thanks, i will talk to her more about it