What is a Precomputed Loan?

Posted: Thursday, January 25th, 2018

In a precomputed loan, the interest on the loan is calculated at the beginning of the financing process. Unlike a simple interest loan, it isn’t calculated on a monthly basis. If you’re considering a precomputed loan, keep the following information in mind:

  • A precomputed loan includes the total amount financed, interest, and any other fees.
  • If you pay off your loan early, you’ll receive an interest refund, although you might save more money with a simple interest loan.
  • If you make a payment late, your interest might not increase, but you’ll be charged a late fee.

Find out today if a precomputed loan is the right choice for you!

Advantages of a Precomputed Loan

The biggest benefit of a precomputed loan is that you have a clear picture of your payments for the future. With a simple interest loan, your interest is calculated every month, so it will change over the life of the loan. However, if you choose a precomputed loan, you’ll receive a clear payment schedule, and the payments will be the same every month. If you’d prefer a consistent payment plan, a precomputed loan may be right for you.

Is a Simple Interest Loan Better for my Needs?

A simple interest loan is one of the most common types of car loans, and it offers the following advantages:

  • Making payments early decreases the overall financing costs you’ll pay for the loan.
  • As with a precomputed loan, you’ll receive up-front information on fees and how much you’ll pay on interest.
  • If you plan to pay off your vehicle early, a simple interest loan will likely save you money.

As you can see, the main advantage of a simple interest loan is for drivers who pay off their loan early. If you’re planning to make consistent monthly payments over the life of a loan, a precomputed loan is likely a stronger choice.

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Where Can I Find a Precomputed Auto Loan?

At Green Light Auto Credit, we can help you decide if a precomputed or a simple interest loan is a better choice for your financing needs. In addition, we offer the following advantages over other financing providers:

Contact us today to get the ball rolling on a precomputed auto loan!