Banks and loans

[sobrique]

Just been to the bank, to say 'gimmee money'.
Not with a shotgun, the police get upset.

They seemed positvely happy to hand me _vast_ amounts of cash. Not that I took any, but it does 'clarify' a bit where I am in terms of options for car replacements.

One thing I couldn't quite figure out though. Loans tend to have 'tiered' interest rates.
E.g. <1k 10% 5k - 10k 9%, 10k-20k 8% etc.

So... surely what you should really be looking to do is take out a loan at the highest interest tier, and then immediately repay everything you don't need, thus leaving you with the right amount of cash and a lower puddle of interest.

Or have I missed something? I don't recall any 'early repayment' penalty on my most recent loan that I repayed a year early. I suppose the repayments would be defined assuming you had the full rate to repay over the full term, but then you could just go for a 7 year loan, and repay 4-5 years worth all at once. (Obviously, this is subject to you being able to cope with whatever baseline repayments would be due on the sum borrowed over the maximum term available)

Comments

[nicolyrezk.livejournal.com]

Basically, the longer the term and the higher the loan, the lower the interest rate, as it 'appears' to give you a saving, but not if you pay back over the full term. However, you CAN just pay back a chunk of it early, but most people don't ever think of doing that.

They just go "WHEEEEE MONEY *buys trips to majorca*"