Deal Pack Blog
Why was the interest so high on my payment?
On occasion, a customer may ask why the interest collected on the payment they just made was so high. They point out that the payment was paid in full and made on time as scheduled on their simple interest retail installment contract.
This is a common question asked typically at the early stages of a loan. It’s easiest to present the customer with an amortization schedule. This reveals that interest per payment decreases over the life of the loan. Interest is calculated on the principal balance from the date of last payment (or the date sold if it’s the first payment) to the date the payment is being made.
Sometimes customers are under the impression that the Finance Charge disclosed on the simple interest contract is the total amount that will be collected over the course of the loan. This is true if every payment is paid in full and on time every time to the end of the loan. If one payment is made a day late, then one extra day of interest will be collected over the original finance charge. If the loan is paid off early, less interest will be collected.
Deal Pack provides a ? button next to the interest field on the Payment screen which displays the calculation of the interest due to the payment date. Please feel free to contact Deal Pack support at 800-526-5832 with any questions or concerns you may have.