Loan Assist - Quick Tips
Interest Rate Computation Under Flat Rate Basis
Fixed Rate Flat-Add-On means that the interest rate and your monthly loan instalment remain the same throughout the duration of your loan. This protects you against any interest rate fluctuations.
Illustration 1
Suppose you take a loan of S$10,000.00 over 5 years at an interest rate of 8.88%. The computation would be as follows:
- Total interest payable over 5 years
S$10,000.00 x 8.88% x 5 years = S$4,440
- Monthly instalment
(S$10,000 + S$4,440) / 60 months = S$240.67
Computation for early redemption
For any standard loan scheme, you are required to pay all principal and interest that would have accrued over the entire loan period. However, in the event you decide to repay the outstanding loan before the loan period ends, you will receive a rebate on the interest.
The interest rebate will be calculated by the using an Interest rebate formula +
Suppose your loan is S$10,000.00 over 5 years at 8.88%. If you repay the entire loan outstanding after making 36 monthly instalments, the computation is as follows:
| Computation For Loan Redemption |
| Original Loan Amount |
S$10,000 |
| Total Interest (based on illustration 1) |
S$4,440 |
| Total payable (principal + interest) |
S$14,440 |
| Less : instalment paid (S$240.67 x 36) |
(S$8,664) |
Less : Rebate of Unearned Interest
Using Interest rebate formula |
(S$728) |
| Total amount payable to bank to fully redeem your loan |
S$5,048 |