Amortizing vs. Simple Interest Loans: Which Is Better for Your Business?

[@LisaGray1000]

Why do differnt loan lengths makes it so confusing

[@Fixedwing4Life]

First half was a great explanation. However, wouldn't you want to use a simple interest time period of 3 years to compare apples to apples? You lost me on the simple interest side of things.

[@Palantir_Daily]

Well, yes but no. She did a terrible job of explain simple interest. Just multiply 12 by the amortized loan rate and that’ll give you the simple interest rate. But simple interest is charge on the daily balance. That’s where the difference lies. Many times, if done right you can save a ton of money because the average daily balance will be lower than the amount that the amortized loan is being interest charged at.

[@caroldayinfoonfinanciallit2896]

I like the idea of this and the explanation but the two examples were so different. It would be helpful to understand what the difference in interest paid would be over a set period that was the same for both or same payment interval ie monthly for both even if the term was different. The daily payments made it a bit more confusing in seeing apples to apples

[@FunderaLedger]

Hey Carol thanks for the feedback. We will take what you said into consideration and use it to try and improve future videos. Thanks for commenting :)

[@scottjordan9204]

Could you do an apples to apples comparison by doing a 3 year loan simple interest ?

[@sergii_real_estate]

00:42 "after calculating..." What the hell its supposed to mean? where are the calculations of monthly payment?

[@jasonwitbeck7435]

They don't want to tell you because the "calculation" is an entire other worm hole...

[@robertkaelberer9526]

So you can only get simple interest on short term loans? What time period constitutes short term?

[@christillman446]

Yeah, thought this video would answer my questions, but then it throws you for a loop by comparing a 3 year amortized loan (at 10%) to a 6 month simple interest loan (with 1.2 factor). completely apples to oranges..... didn't clear up anything.

[@tulio3571]

on a 30 years mortgage amortized loan of $412000 at 4.5 interest ,would i be saving more if i send extra to the principal on the first 15 years or the last 15 years?if i had a choice .would be sending the same $400.

[@etyodada]

Paying the first years reduces the total interest paid over the life of the loan because the interest for every following month is calculated on the lower amount of principal owed. The principal is higher at the beginning of the term. The sooner you get it reduced, the less interest is paid over the life of the loan because the same interest rate, on a larger amount, is higher. Also, a higher amount of the payment is applied to the interest during the first 15 years. So, you are reducing the prinicpal very slowly. The extra payment applied to the principal accelerates the reduction in principal, ergo, the reduction in overall interest accumulated and charged. Hope this helps. I noticed this is a 3-year old post. Still, on a 30-year loan, it is not too late to save "a ton". Hope this helps! Note: check with the lender because some might not accept payment to reduce the principal. They will pro-rate it and apply it to both principal and interest. For other lenders, you might have to explicitly stipulate that you want the extra amount applied to reduce the principal.

[@Sky-pg6xy]

Great video. Thanks!

[@alfeoc]

Why are you doing two different time periods? Boo!

[@TexasUnfiltered]

Not a good video! Explained about nothing and did not compare the two types of interest loans on an apples to apples comparison.

[@jzk2020]

that hot girl talking about paying off student debt or mortgage in 1/4 the time brought me here.

[@CBBC435]

Jeez. You could have explained this simply by presenting everything written out, without the viewer having to watch an animated pencil and suffering through the same old tired banjo music. Is it kind of cute? Yes. Does it help to explain? No.

[@JohnDoe-du1no]

Interest is bad

[@Bob-cd5pp]

so lame