What is the interest?

Interest concerns the amount of the collected interest that must be paid at the time. Interest is different from principal and is evaluated for loans. Interest can increase daily, weekly, monthly or quarterly basis and can be due at different intervals depending on the loan conditions. An individual who borrows money is that you do it, charges interest or fee. Interest is usually represented as a percentage.

The percentage called interest rate varies depending on the type of loan. Interest rates tend to be lower for secure loans, such as mortgages where rates can be around 5 percent. On the other hand, rates are often higher for unsecured loans, such as credit cards where rates can reach up to 20 percent per year.

The terms of the credit document will also explain how the interest is calculated. The interest is determined by multiplying the main balance. For example, if 5 % annual interest is charged from a loan but interest increases monthly, it means that each month is chargedEach month 0.004 percent (5 percent divided by 12).

Interest is increasing during the loan and this interest, which is growing, becomes part of the payable balance. If the person has interest payable, the interest must be paid at certain points depending on the nature of the loan. For fixed mortgages, the interest rate of the loan is added and added to the principal, which is used to determine how much the house owner has to pay every month to pay the mortgage in full by the end of the loan term.

For other types of loans, the interest due is simply added to the main and monthly payments are determined on the basis of the total amount. In these cases, the payments made by the person are generally applied to pay the interest due and then reduce the principal. If the payments made by the person are not enough to pay interest, the unpaid interest will be registered on the principal and increases the balance due. In these situations,Although the person makes payments per month, his / her balance of loans will generally continue to rise instead of falling.