![]() ![]() In a pre-computed interest deal, the methods used to determine your “Refund” of unearned interest charges (including an arcane formula called “The Rule of 78s”) results in most of the interest charges being deemed “earned” very early in the loan term. When you prepay a pre-computed interest loan, you are paying off all of the “Account Balance.” (The Account Balance has all the principal and interest on the loan added together.) So when you prepay, you are entitled to a “Refund” of the interest charges that have not been “earned” by the lender – because you didn’t keep the money for as long as they thought you would when they pre-computed your interest. The loan is paid off and no more interest accrues. Prepayment, the principal balance becomes $0, so the interest due next payment is Interest is calculated based on the reduced principal balance? Well in a Remember we said thatĮach payment reduces the principal balance of a simple interest loan, and that Remaining principal balance and any accrued interest. When you prepay a simple interest loan, you pay off the ![]() The main difference between simple interest and the FinanceĬharge under precomputed loans comes with loan prepayment AND when you get sued The Finance Charge in a precomputed loan is not The Finance Charge is considered to be the time-price differential asĬonsideration for the loan. The premium included in a precomputed loan is part of the “FinanceĬharge” for the loan. Monthly payment on a pre-computed interest loan is determined by dividing theĪccount Balance by the number of scheduled loan payments. Interest over the life of the loan is called the “Account Balance.” Each Payments by taking all the interest that will be due over the term of a loanĪnd adding it to the principal amount of the loan. ![]() Pre-Computed interest is a method of calculating loan Precomputed loans, which allows Mariner Finance to recover a much higher Under Kentucky law, Mariner Finance can charge simple Mariner Finance specializes in high-interest loans forĭesperate consumers. ![]()
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