Which Credit Interest Which Is Most Profitable
The thing that must be considered when you want to use bank credit is to see the available ceiling and the installments that you have to pay until finally paying off the loan. Many people who use credit don’t care about interest. Most people assume interest will be seen from the total payment minus the actual loan amount.
You are not aware that the type and method of calculating interest can affect the total value of the loan. Every credit actually has its own type of interest or between one and the other is not the same. So, it’s a good idea to find out what type of interest the bank has in advance so that you can find out what type of interest your credit is charged.
By knowing the types of interest, you can find out how much installments or installments you should pay and how long the loan can be repaid. Thus, you can better manage your finances. Basically, there are three types of interest imposed by lending banks. The three types are flat interest, effective interest, and annuity interest. The following is an explanation of the three types of flowers, namely:
You must have got a vehicle loan offer brochure, if you notice there is a table containing the amount of the loan, the tenor of the loan and the amount of installments. Try to see in the installment column there, the amount of installments that you have to pay each month and with the same amount until the end of the credit period.
With consistent payment, it can be an indication that credit is offered to apply flat or flat interest rates. Each interest rate must have a different count, the flat rate of calculation is the easiest compared to the other two types of interest. In loans with flat interest the loan ceiling value and interest will be calculated proportionally according to the loan term or tenor. For example Anne Shirley will provide a case study:
Mr. Rennie proposed a KTA of Rp150 million with a credit period of 12 months, with a flat interest of 10%, how much installments should Mr. Rennie pay every month?
You only need to enter the data that is already on the calculator, then press count, then the results appear as below:
So, as you can see, from the calculation of the calculator, the installment debt repayment fund that must be packed by Rennie, is paid Rp. 13,750,000 per month. See the installment value that must be paid does not change and remains.
Another name for this type of effective interest is the sliding rate. Usually the use of this type of interest is applied to loans with a long time or tenor, for example when you apply for a Home Ownership Loan (KPR) or Apartment Ownership Credit (KPA).
Usually the effective interest rate is lower than the flat interest rate. Therefore, effective interest rates are more suitable for use in long-term loans. At flat interest, the creditor only calculates at the beginning of the loan to determine the installments, on loans with effective interest calculation will be carried out every month. This is because the remaining loans will decrease every month so it is necessary to recalculate. In order to better understand how to calculate effective interest, here is an example of a case that applies the use of this type of interest.
Mr. Rennie applied for a mortgage of IDR 150 million with a credit period of 12 months, with an effective interest rate of 10%, then how much installments should Mr. Rennie pay every month?
So as you can see, from the calculation of the calculator, the installment debt repayment fund that must be packed, Rennie pays each month, the first month is different than the second month. See the installment value that has to be paid every month and changes in the number.
This type of interest is a modification of the effective interest in order to make it easier for creditors to pay installments each month because of the same amount. Or in other words, this annuity interest makes the monthly installments paid always fixed but the composition of interest and principal installments change periodically. The principal installments per month will increase but at the same time the interest rate per month decreases.
This interest calculation makes the portion of interest in the initial loan become very large but slowly the portion will shrink at the end of the credit. One thing to know, the calculation formula is the same as the effective interest.
So as you can see, from the calculation of the calculator, the installment debt repayment fund that must be packed, Rennie pays each month, the first month is different than the second month, the same as the effective interest. See the installment value that has to be paid every month and changes in the number.
Determine and submit the appropriate interest
After you know the various types of interest in the bank, you can predict and submit the right interest for you, choose the most profitable credit so that the chosen credit can run smoothly according to your capacity as a debtor.
Hopefully the above article is useful for you, so you can choose the right credit interest. Share your experience in applying for credit and don’t hesitate to ask because our financial planning will reply, send your comments and input in the comments column.