Eaglemark Savings Bank - Full explanation of how payments would be divided towards loan
Not only do they charge high interest but they do not evenly disperse interest they make sure they get all interest up front they say you are getting 16 percent interest but after you make payment you see that technically they are taking over 30 percent interest... Our payments are only $111.00 but after our first payment with only 16 percent which at least $93.00 should go to principle and the rest interest on our statement said $43.00 went to interest and $68.00 went to principle so basically charging 30 percent interest and that is not the way it should be so beware they do not disclose all their practices on the way they disperse your payment...They make sure that if you wanted to pay off early they get most of their interest up front so they won't be missing out on all the interest they they lose on if you payoff early..
Reason of review: Problems with payment.
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You need to do some reading on how interest rates work. You have it completely wrong in your understandings.
They are charging you interest on your principal balance not on your actual monthly payment. every month you pay interested that has accrued from your principal balance. As you pay more and more on your principal balance each month the amount of interest will slowly go down because of course you have a lower principal amount. 43$ went to interest because that is 1/12 of 16% of your principal balance you still owe on your cycle.
1/12 because you pay monthly. If you don't learn this now you are in for a rude awakening when you buy a house or vehicle
You should read this:
https://www.investopedia.com/terms/s/simple_interest.asp
You should split your payment and pay $55.50 every 2 weeks instead of $111 monthlyโyouโll save interest. You can even pay weeklyโ$27.75 and save even more in interest.