INTEREST CHARGES

The ultimate loan would have no finance charge. You would merely borrow $100 and repay it in 10 installments of $10 each. We all know that can not happen, so NCCU keeps its loan rates at the very minimum possible. Unlike some financial institutions, we only charge you for the time you have the money borrowed. No hidden charges, no prepayment penalties and no credit bureau fees are required.

Finance charges are very simply to calculate: amount loaned multiplied by the interest rate multiplied by the number of days you have had the loan. For example, assume you obtain a loan on March 1 for $1,000, the payments are $100 per month and the Annual Percentage Rate (APR) is 9 percent. You make your first payment on April 1.

You would divide the 9% by 365 (number of days in a year) to obtain the daily rate of .0247 per day. Multiply the daily rate by the number of days since you obtained the loan (31 days), which equals .7657. By multiplying that factor by the balance remaining (1,000), you find the interest amount due on April 1 is $7.66. You subtract the $7.66 from the $100 payment and find the principal reduction will be $92.66. Next month, you will start with a principal balance of $907.34.

Remember, you only are charged for the money as long as you have it. If you had paid $200 instead of $100, your new principal amount would be $807.34 and that figure would then be used for the next month's payment calculation, thereby saving you some interest charges.