Understanding Your Simple Interest Auto Loan

Your auto loan is calculated using the simple interest method. We calculate the interest on your loan by multiplying the outstanding principal balance by the interest rate, then divided by 365 days (this gives us the per diem). We multiply the per diem by the number of days elapse between payments. In other words, you pay us interest based on how much principal you owe and the number of days you owe it.

Paying on time makes it easy

Your monthly payment amount and payment due date are the same every month. When we set up your loan repayment schedule, we calculate how much interest and principal you need to pay and the date you need to pay it each month so that your balance will be zero at the end of your loan. If you make all your regular monthly payment on time as scheduled, and there are no other changes to your account, you should expect to pay no more or less than originally scheduled.

Paying late costs you money

When we receive a payment, we apply it first to any outstanding fees, then to amount of interest due. Any amount left after this is automatically applied then as a reduction to your principal. Therefore, if you pay late, more of your monthly payment will be used to pay the interest you owe and less will go toward reducing your principal balance, you may also be charged a late fee, which also increases the cost of you loan.

Other actions that drive up your costs:

  • Missing a payment – adds interest and late fees
  • Moving your due date – adds interest
  • Payment extensions – adds interest and extends your loan payment schedule

Ways to help save money and time

  • Pay on time – Late payments mean extra interest will accrue, and possibly late fees.
  • Pay Online – Sign up for repeating payments from any checking account, or debit card at Credit Concepts website. This helps you avoid late payments and saves time because you don’t have to write a check to pay your bill each month. If you set up payments to come directly from your account at a set time each month, you won’t be charged a convenience fee.
  • Pay extra – Paying more than your regular monthly payment can help lower your outstanding principal balance faster and reduce the interest that accrues on your loan.

We’re here to help

If you want to know more about simple interest, setting up repeating payments, making extra principal payments or have any other questions, please call us at 1-888-301-1043.