Interests and loans

[Rexos]

I don't really get these loans, everytime these interests confuse me.....I just took a 331 ducats loan, with 4% interest....now I know that I was bad at math in school, but if my brain still works, 4% of 331 should be something like 13.....so I should be paying 344-345 ducats....but if I go to pay loans in the economic section I got to pay the ridiculous amount of 391 ducats, that is like an interest rate of about 18-18,5%(a little too much I think)....and this is not some random and isolated events, everytime I take a loan I pay too much interests for my calculations,
but now I decided to clear my mind asking you guys why...because it's clearly not something casual

 

[Dovahkiin MasterHoe]

The Interest rate is per year. I believe loans are normally like 5 years long so you are paying 5 years or whatever of interest.

 

[Rexos]

So I pay.....20% of interest? I'll be honest I already thought about this, it seems the only solution, but....then why not writing 20% of interest in the first place if you can't do anything to change and pay less? or you can?

 

[Dovahkiin MasterHoe]

So I pay.....20% of interest? I'll be honest I already thought about this, it seems the only solution, but....then why not writing 20% of interest in the first place if you can't do anything to change and pay less? or you can?

Not really but the reason I'd guess they say 4% is because 1. Ideas can change that interest and its always in increments of 1% 2. that's just a standard for loans in the real world too. Interest is always calculated on a per year basis.

 

[PhoenixG]

you pay yearly 4% and the loans are 5 years long. So each year you pay 331 * 0.04 = 13.24 ducat. Since it's 5 five years You'll pay for that duration 5 * 13.24 = 66.2 ducat. So if you want to repay it immediately after you took a loan, you'll pay 331 + 66.2 = 397.2 ducat.

So when you saw that 391 it means there are already 6 month passed when you took the loan.

 

[Rexos]

Ok, finally I got it, if I want to pay now I have to pay more....better wait at least 2-3 years then

 

[PhoenixG]

It doesn't matter, since you'll already paying the interest monthly. You just pay the interest at once instead monthly.

 

[zedyue]

If you want to wait to pay it off then try to get a -interest per annum modifier
Always pay off loans if you get one of these since they reduce how much you have to pay. Don't wait for them to expire!