How To Calculate Loan Interest – Bankrate
- April 8, 2021
- By: Greenpath Financial Wellness
Planning to borrow money? Bankrate asked GreenPath to weigh in on what you need to know about interest.
Bankrate highlights in their article that there are many factors that can affect how much interest you pay for financing – including amount of the loan.
“For larger loans, the lender is assuming greater risk. Hence, the lender seeks a higher return,” says Jeff Arevalo, financial wellness expert for GreenPath Financial Wellness.
If you borrow $20,000 over five years with a 5 percent interest rate, you’ll pay $2,645.48 in interest on an amortized schedule. If you keep all other loan factors the same (e.g., rate, term and interest type) but increase your loan amount to $30,000, the interest you pay over five years would increase to $3,968.22.
Takeaway: Don’t borrow more than you need to. Crunch the numbers first and determine exactly how money you really require.
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Jeff Arevalo is a Financial Wellness Expert and has been with the Greenpath since 2006. He possesses a strong passion for helping others and takes great pride in providing strong financial education and effective money management tools to help make a difference in people’s lives. Jeff and his wife recently welcomed a baby boy to their family and are excited to navigate the world of parenthood for the first time.