If the loan has ‘daily interest’ how does this work?
Daily interest is calculated against the outstanding balance of the loan 💷
- That is because interest is calculated as a ‘percentage’ of the balance.
- When the balance of the loan is higher in the early stages of the loan term, more interest is being accrued against that higher balance.
- As you make more payments and the balance starts to drop, there’ll be less interest.
- If you make extra payments on top of your monthly repayments, you can reduce your loan balance faster, which will save you money.
- So you don’t have to repay the balance in full to save yourself a bit of money along the way.