I am applying for a consolidation loan and have two offers. The interest rates are different on each. One is 10.99% and one is 12.99%. Why are the payments the same for a five year fixed loan? How are payments calculated?
Payments follow a basic formula using "Principal", "Rate" and "Time" in the equation. There can be variance in the final numbers based on the type of accrual method used and other fees involved in the loan. Accrual methods cause minor differences in your costs. This is when a lender assumes the year has 360 days or 365, as one example.
One lender may have fees that another doesn't. This could be a loan origination fee, an application fee or any number of other creative ways to recoup the cost of making the loan. Ask each for an itemization of the loan amount and costs. Look for credit insurance as well as other fees as being the source of the difference.
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Payments follow a basic formula using "Principal", "Rate" and "Time" in the equation. There can be variance in the final numbers based on the type of accrual method used and other 