To calculate the interest that we are paying in each period we have to know what the capital is alive at that moment. The living capital is the part of the principal (what we have borrowed) that we still have to pay back. To know more about car title loan visit here.
For the first period, it is simple since we will simply have to multiply the requested capital by the interest rate for that period, but to calculate the rest is not so simple at first glance.
The outstanding capital of each period will be equal to the outstanding capital of the previous period minus the amount of principal that you have amortized in that same period.
C k = C k-1 – A k
Where C k and A k are the live capital and amortized capital of the current period and C k-1 is the live capital of the previous period.
Then we will have to know how much we have amortized in each period. If we know the installment we pay and the interest for the first period, then we can calculate everything else.
Car loans through a renter :
This is a type of car lease where the lender buys the car and then rents it to the borrower. The borrower pays the lender in fixed monthly payments and is responsible for any maintenance and repairs that the car may need during the term of the contract.
Once the lease period is over, the borrower has the option of returning, refinancing, or purchasing the car by paying the remaining amount.
In this case, the borrower is not the owner of the car.
Advantages and disadvantages of car credit with renters:
- If you like to renew your car in a frequent way, this is your type of car title loan because you forget about factors such as the depreciation of the value of the vehicle or the maintenance of it in the long term.
- If you are a natural person with a business activity or you work for fees, you can agree to a tax deduction.
- The monthly rent is usually lower than the monthly payments in financing.
- One downside is that there may be a mileage restriction. If you go over a certain number of kilometers, you may be charged a penalty for the excess distance.
Home equity auto loan:
With this car title loan, you can leave your house as a guarantee of this credit. More and more financial institutions allow you to leave a house as collateral to obtain a loan that you can use for anything.
Advantages and Disadvantages of Home Equity Auto Credit:
- Typically larger amounts are granted than other types of auto loans (based on the value of the home you provide as collateral).
- You can put the property as collateral, even if you are still paying the mortgage on it.
- The repayment terms are comparable to those of a normal and current mortgage (between 5 and 30 years).
- The interest charged on home equity auto credit is higher than other types of loans.
- If you cannot pay, you have to be aware that you could lose your home.