Can advance payments – Advance Loan
Here we explain whether or not it is possible to make advance payments.
Good Finance is not a traditional institution that lends its own funds, but an intermediary between those who can lend their money and those who request it. That is, the people who lend receive the direct interest of those who apply for the loan.
Our model is based on both parties, both Lenders and Applicants, winning by registering on our platform. On the side of the Applicants, if they meet our requirements, they can have a credit with a very attractive rate and pay for a fair credit. On the side of the Lenders, get an excellent return on your money, which otherwise, leaving it in a bank account will earn a tiny or zero rate.
Benefit of both parties is that it was decided not to allow capital payments in the credits
Seeking the benefit of both parties is that it was decided not to allow capital payments in the credits, since if this is allowed, our Lenders would stop obtaining the earnings they estimated from the beginning of the credit. But we also think of our Applicants! Although capital payments are not allowed, they can pay off all their debts in advance and save a lot on interest. What does that mean? We give you an example:
Juan asks for a loan for $ 50,000 for 24 months to go on vacation. After analyzing your request, we grant an annual rate of 18.9%, so you have to make monthly payments for $ 2,592.03. Your payment table would be as follows:
Total monthly payment consists of capital
In the table we see that the total monthly payment consists of capital, interest and VAT. For 8 months, Juan makes his partial payments in a timely manner, but in the ninth month of his credit, he receives $ 37,000 pesos that he had not contemplated. If he decides to use that money to pay off his credit in advance, he would have a great saving, since he would only pay the capital of the months he still owes, plus the interest and VAT of the 9th month that were already accrued.
If we go to the table, we see that Juan’s debt at that time (is in purple) is:
- Capital: $ 35,680.97
- Interest: $ 561.98 (interest for month 9)
- Interest VAT: $ 89.92.
This gives a total of $ 36,332.87 and is what Juan would have to pay by liquidating ahead of time. So what would be the savings?
In the table we see that the interests that Juan would not pay, from month 10 to month 24, are $ 4,430.72 plus VAT for the same period of $ 708.92, for a total of $ 5,139.64. If Juan wants to take advantage of the money he received and liquidates his credit, he obtains an interest saving of $ 5,139.64 (highlighted in blue).
In order to liquidate in advance, you only need
- Be up to date with your credit
- Make your payment 10 calendar days before your cutoff date
On the other hand, if Juan decided to use part of his money to, for example, pay 2 anticipated monthly payments ($ 5,184.06), he could do it without problems, but these would be applied on the scheduled cut-off date without this representing any interest savings for Juan . Then, partial advance payments can be made to have greater peace of mind, but interest savings will only be generated at the time of liquidation. Do you notice the difference?
Liquidating in advance means, then, that you save the interest of the months not yet accrued, since only the capital owed at that time is paid until the final term of the credit and the interest of the current month. Making partial advance payments is possible, but they do not generate savings, as they are applied on the cut-off dates programmed in the original amortization table. So if you are thinking of asking for a loan with us or you already have one, do not forget that although you cannot make payments to capital, you can pay off your credit in advance and save yourself a lot of interest!