Get Smart About Credit Day 2020 is on Friday, October 16, 2020: Primerica SMART Loan vs. conventional loan?
Friday, October 16, 2020 is Get Smart About Credit Day 2020. Get Smart About Credit The Get Smart About Credit
Bankers and members of the credit history industry offer talks and discussions at schools, colleges and work environments regarding the significance of excellent financial management.
Primerica's SMART loan uses simple interest calculation while a conventional mortgage uses schedule interest calculation.
Schedule interest is where payments are credited to interest and principal on the due date, whether you pay it a little early or little late. Most lenders use schedule interest method. Your amortization schedule is already fixed since the first day you sign the loan contract.
Simple interest is where the interest portion of the payment depends on the actual number of days that have past since the last payment. If you pay it early, more of your payment is applied toward the principal. If its late, more goes toward interest. If its on time, there is no difference between schedule interest and simple interest. However, if you were offered a bi-weekly payment (meaning your monthly payment is split in half and you pay this amount every 14 days), the savings on a simple interest method is huge!
Take a look at this example:
$100,000 loan with a 10% interest.
Monthly payment is $877.57
With schedule interest calculation (which is used in mortgages), this is how the loan work:
Month 1: $100k x 10% = $10,000 interest
$10k divided by 12 months = $833.33 is 1st month interest
$877.57 - $833.33 = $44.24 goes toward the principal
Month 2: $99,955.76 x 10% = $9,995.576
$9995.576 / 12 = $832.96 is 2nd month interest
$877.57 - $832.96 = $44.61 goes toward the principal
As you can see, it takes a very long time to build equity in your home.
With simple interest calculation (which is used in all loans from Primerica) and you pay every 14 days, this is how the loan work:
Month 1 (day 1 - 14): $100k x 10% = $10,000 interest
$877.57 divided by 2 = $438.79 bi-weekly payment
$10k divided by 365 days = $27.40
$27.40 x 14 days = $383.60 (first 14 day interest)
$438.79 - $383.60 = $55.19 is applied toward principal
Month 1 (day 15-28): $99,944.81 x 10% = $9994.481
$9994.481 / 365 = $27.38
$27.38 x 14 = $383.32 (second 14 day interest)
$438.79 - $383.32 = $55.47 is applied toward principal
Month 1 summary: Your total payment from day 1-28 is $877.58. $766.92 is interest payment and $110.66 is applied toward principal.
Month 1 - 2 (day 29 - 42): $99889.34 x 10% = $9988.934
$9988.934 / 365 = $27.37
$27.37 x 14 = $383.18 (third 14 day interest)
$438.79 - $383.18 = $55.61 is applied toward principal
Month 2 (day 43-56): $99,833.73 x 10% = $9983.373
$9983.373 / 365 = $27.35
$27.35 x 14 = $382.90 (forth 14 day interest)
$438.79 - $382.90 = $55.89 is applied toward principal
Month 2 summary: $766.08 is interest payment and $111.50 is applied toward principal.
Eventually, the bi-weekly payment plan with simple interest will pay this 30 year loan off sooner by a few years than a traditional mortgage that uses schedule interest.
Three questions you should ask yourself when you considering to refinance;
1) What is your total cost?
2) When will you be out of debt?
3) What is your interest rate?
Hope that helps
How can I get credit???
You're so smart. I wish I asked the question at your age.
There are two ways to get credit in the next 60 days. First take $200 - $500 and open a saving account at another bank.
Come back a week later and ask for a secured loan equal to the amount you deposited in the savings account. Don't spend the money.
Go to another bank and open another savings account with the money you received from the bank loan. Come back a week later and ask for a secured loan in the amount in the savings account.
Now go to one more bank and do the same. NEVER SPEND THIS MONEY. Now, it's almost a month later. Go back and pay the first loan off 100%.
The next week pay the second loan. The third week pay off the 3rd loan. You will have paid off 3 bank loans in 45 days and BOOSTED your credit score. That's one way. AND it 's the fastest. Just don't spend the money. Only use it to open a savings account - get a secured bank loan and pay it off.
The second method is to apply for department store credit cards. The key is to only buy tiny items like earrings or underwear etc. You are not to buy items that you can't pay off in 30 days. Don't buy gifts for others. Do this for about 3-6 months then cut up those cards.
Banks will offer you unsecured lines of credit within 90 days. Handle them the same way and keep expanding your line of credit. Always pay them off within 30 days - unless you are buying a house. The banks hate when you pay off your loans early. But stay in control!
You only need 1 credit card ever. You should always pay with cash - STAY OUT OF DEBT. This will allow you to live a rich - sane - and wonderful life! Trust me.
I have smart notebook 10 on my netbook. I got it for free, as a 30 day trial from the smart website about 2 months ago. i tried to download it again for another free trial (didnt work) but i had to enter my work number?? im only twelve. i went on youtube and got a free product key and i started from there. its really good. i dont think there is any programmes as good as smart notebook ten but try ms paint. its not very good