How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Gerald, Esq Your Own Question
Gerald, Esq
Gerald, Esq, Lawyer
Category: Business Law
Satisfied Customers: 2850
Experience:  30 years of experience
77476456
Type Your Business Law Question Here...
Gerald, Esq is online now
A new question is answered every 9 seconds

I am looking to apply personal loan & wanted some

Customer Question

Hi, I am looking to apply for a personal loan & wanted some clarification on some terminology.
Submitted: 1 year ago.
Category: Business Law
Customer: replied 1 year ago.
Hi, I'm looking to apply for a personal loan & called the loan provider to ask the following question: I asked them if the loan interest was simple or pre-computed : that is. if I paid a 5 year loan off in one year, would I be paying the interest for one year or for the whole 5 year amount; Whereas, the provider answered in the following fashion, stating that I would only be charged interest for the one year. Once the balance of the loan was paid off, in the year period, I would NOT be charged any interest. As I thought about the answer, after the call ended, I am still not clear if I received a clear answer to the question. Can you provide guidance to my initial question to the provider & if the question was answered correctly. Thank you
Customer: replied 1 year ago.
According to the financial dictionary, in a simple interest loan, you will only be responsible for the interest for the period of the loan that you hold any balance, simple interest; And NOT pre-computed interest that would be computed into the loan at the beginning of the loan for the whole loan time period & thus even if you paid off the loan early , the computed interest would be included. Thanks
Expert:  Gerald, Esq replied 1 year ago.

Hello,

Thank you for using Just Answer. I want to provide you the best service I can. Please feel free to ask any follow up questions you have.

I am an attorney with 30 years of experience; I hope to provide you information that will help you in resolving your question.

In regard to a personal loan the best terms for the brrower are "simple interest" and "no pre-payment penalty." These are the terms you want in your agreement in regard to the interest.

As to your direct question, on a simple interest loan you only pay the interest on the mony while you have it. So if you hold the loan for one year you pay that years interest. Of course since interest is calculated on a percentage basis, the earlier payments are comprised more of interest than of principle.

Please note that under federal law the lender must provide you a truth in lending statement prior to you signing for the loan. The truth in lending statement with specify the amount of interest you will pay.

In regard to pre-payment penalties, this is not a good term for you because it requires you to pay a specified amount if you pay the loan early. So make sure you have no pre-payment penalty.

I want you to be comfortable and satisfied with my attempt to assist you. Please, if you have ANY follow up questions, feel free to ask. Please note that I am generally unavailable Friday evening through Sunday.

I hope the information I have provided is useful to you and that I have earned a positive rating from you. It costs you nothing extra, and is the only way I get credit for my attempt to assist you.

If you are dissatisfied with my response PLEASE let me know before giving me a negative review so that I may try to be of better assistance. Or if you prefer, let me know and I can “Opt Out” and your question can be re-posted without additional cost to you. I will be fair to you and only ask the same from you.

Good luck,

Please note: Information given is not legal advice. Only your local attorney can give legal advice. I can't establish or accept an attorney-client relationship with you. All posts are available for public viewing.

Related Business Law Questions