When you use your line of credit, a sample is taken from your bank account each month until the reserve is fully restored.
The amount of the monthly payment is contractually fixed, but some banks allow modulations. The monthly payment is used both to repay the borrowed capital – and thus replenish the reserve – to pay the insurance premium in time, and to pay the interest due for the month.
The level of the monthly must be set at a level high enough so that the loan repayment is made on a reasonable time. If the amount of credit used – that is to say, the outstanding balance after the last operation – is less than or equal to a determinate amount, the repayment shall be made in a number of years; it’s depend on the amount borrowed.
Each month you will receive a specifying account statement:
– The closing date of the statement and the date of payment;
– The fraction of available capital;
– The amount of maturity, the part corresponding to the interest;
– The rate of the period;
– Where appropriate, the costs of assurance;
– The total amount due;
– The amount of payments already made since the last renewal, highlighting the share paid on capital borrowed and that paid in interest and miscellaneous fees related to the credit transaction;
– The possibility for the borrower at any time to reduce its credit reserve, the suspension of the right to use or termination of the contract;
– The fact that at any time, the borrower can pay cash for all or part of the outstanding amount, without limiting the amount of one final installment;
– Estimating the number of months remaining due to reach to a full refund of the amount actually borrowed estimate prepared in accordance with the agreed repayment terms.
Despite all this information, it is difficult for the customer to verify the correct amount of interest, which is calculated daily and the closing dates do not necessarily coincide with the dates of collection of monthly payments. More, which complicates things further, each credit institution has its own method of calculation of interest. Do not hesitate to contact the lender if you have a question or if you do not understand any of the information on your statement.
Finally, remember that you can perform a prepayment at any time of your revolving debt, at least equal to three times the amount of your monthly payment. No fees or penalties may be requested at this time.