Simple Interest Loan vs Pre-Computed Loan

Posted: Sunday, September 2nd, 2018

A simple interest loan allows you to reduce the amount of your monthly payment if you pay more than the specified amount. With a pre-computed loan your scheduled monthly payment will not change if you pay more.

Simple Loan

Green Light Auto Customer in front of White Nissan VersaA simple loan is not compounded, the principal is determined by the outstanding balance. You pay a set monthly amount plus interest based on the balance of the original sum lended. Anytime you are able to pay more, the monthly amount will be less going forward as you pay down the loan.

Pre-Computed Loan

The interest rate for a pre-computed loan is calculated up front. They are fixed and there is no reduction in the amount if you pay more at any given time. If you are able to pay off the loan early, you’ll receive a refund on the pre-calculated interest.

Learn More About Simple Interest Loans and Pre-Computed Loans

Knowing your options when applying for an auto loan is essential to securing the deal that best works for you. The experts here at Green Light Auto Credit are always ready to help you decide which loan method suits your budget. We can also clear up any confusion regarding APR vs. interest rates and answer other questions associated with car loans, such as “How is interest calculated?” Call us at (800) 200-5551 or apply for financing online.