Does interest on a credit card loan compound like an auto loan does?

IM planning on buying a motorcycle. its considered a crdit card loan not an auto loan. so if i bought a bike for 9499.00 at 7.9% interest rate, i would only pay like 750.421 in interest.





with my car i bought for 12,000 i end up paying almost 20,000 after interest at 21%

Does interest on a credit card loan compound like an auto loan does?
NO. In BOTH cases, you pay the FULL accrued interest every month. Therefore, they DON'T compound. The total interest paid depends on BOTH the interest rate and the TERM of the loan (# of payments).
Reply:There can be a number of ways interest is calculated, but in general, installment loans calculate interest in a more simple way, which means better for the consumer.


I think your math is off. Sure if you make the minimum payment each month, then your interest would be around 750 for the year, but you would be paying on the loan for 10 years.





Find a loan payment calculator and put your variables in.


For example $9500, at 7.9% interest is a payment of $231, per month for 48 months. So in 48 months your balance will be zero.


But that rate is probably only for 24 months, then goes up to 19%. You need to pay $300 a month, so when the rate goes up the balance has already been paid down some material amount.


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Reply:No. http://credcards.maclenet.com - try this one to check how they are compounded. I personally use it.
Reply:I order to be fair to consumers, it is necessary for credit companies to express interest rates uniformly. They are comparable.





You would only pay 750.42 in interest per year with the credit card, whereas with the 21% loan you would pay almost 2000 per year in interest.





Watch the terms of your credit card though, you don't want the rate to balloon after 6 months and the be worse off then when you started.