If you have a Daily Interest Loan:
Daily interest is calculated using the outstanding principal balance of the loan (the amount you borrowed) multiplied by a daily interest rate.
When the principal balance of the loan is higher in the early stages of the loan term, more interest is being applied. As you make more payments and the principal balance starts to drop, therell be less interest.
Although we calculate interest daily, we only add it to your loan once a month. You can see the amount of interest charged on your annual statement.
If you make extra payments on top of your monthly repayments, you can reduce your loan balance faster, which will save you money.
So you dont have to repay the balance in full to save yourself a bit of money along the way.
If you have a Pre-Calculated Interest Loan:
The interest on your loan is calculated at the start, based on the amount you borrow and the loan term you choose.
That interest is added to your loan balance, so you can see the full cost upfront. You pay interest only on the amount you borrow. You dont pay interest on interest.
At the start, your balance equals your loan amount plus the fixed interest.As you make repayments, your balance reduces. Your regular payments cover both the loan amount and the fixed interest.By the end of your loan term, youll have paid off the full balance, leaving you with nothing more to repay.
Your repayments are spread evenly over your loan term, so there are no surprises. If you want to pay off your loan early or make extra repayments, we can adjust the remaining interest, so you only pay interest for the time youve borrowed the money.
You can find the type of loan you have by logging into your Online Account. This will tell you whether your loan is a pre calculated interest loan or a daily interest loan.