Loan Conditions Example

Loan Option 1: £1,000 for 3 Months

•Loan Amount: £1,000

•Interest Rate: 3% per month

•Loan Term: 3 months

Monthly Payment Calculation

The loan follows a simple interest model where interest is charged on the remaining balance each month.

1st Month Payment:

•Interest: £1,000 × 3% = £30

•Total Payment: £1,000 ÷ 3 + £30 = £363.33

2nd Month Payment:

•Interest: (£1,000 – £333.33) × 3% = £20

•Total Payment: £333.33 + £20 = £353.33

3rd Month Payment:

•Interest: (£1,000 – £666.66) × 3% = £10

•Total Payment: £333.34 + £10 = £343.34

Total Interest Paid: £30 + £20 + £10 = £60

Total Amount to be Repaid: £1,060

Loan Option 2: $5,000 for 6 Months

•Loan Amount: $5,000

•Interest Rate: 3% per month

•Loan Term: 6 months

Monthly Payment Calculation

1st Month Payment:

•Interest: $5,000 × 3% = $150

•Total Payment: $5,000 ÷ 6 + $150 = $983.33

2nd Month Payment:

•Interest: ($5,000 – $833.33) × 3% = $125

•Total Payment: $833.33 + $125 = $958.33

3rd Month Payment:

•Interest: ($5,000 – $1,666.66) × 3% = $100

•Total Payment: $833.33 + $100 = $933.33

4th Month Payment:

•Interest: ($5,000 – $2,500) × 3% = $75

•Total Payment: $833.33 + $75 = $908.33

5th Month Payment:

•Interest: ($5,000 – $3,333.33) × 3% = $50

•Total Payment: $833.33 + $50 = $883.33

6th Month Payment:

•Interest: ($5,000 – $4,166.66) × 3% = $25

•Total Payment: $833.35 + $25 = $858.35

Total Interest Paid: $150 + $125 + $100 + $75 + $50 + $25 = $525

Total Amount to be Repaid: $5,525