AboutJim Meadows Expertise I can respond to most questions concerning consumer and business relationships with US financial institutions. My expertise touches on deposit and loan issues and particularly on strategies to navigate through bank policies personell and practices. I have a degree in Economics, attended law school, Graduate Shool of Banking, and Commercial Lending and Compliance Schools.
Experience I have twenty years experience as a bank CEO. Most of those years were spent operating a bank focused primarly on serving consumer/retail needs. I helped pioneer deposit and loan products for low/moderate income individuals. I currently serve on multiple bank boards and am Chairman of a Commercial Bank in Atlanta.
Expert: Jim Meadows Date: 7/26/2008 Subject: Best loan option
Question Let's say you want to buy a car. Having the same interest rate(i.e. 3.99%), same schedule of payments (i.e.60 monthly payments)and the same initial balance, what's the most advantage option to save in paid interest: a simple loan or an average daily balance loan? What if some additional payments to the principal can be made from time to time?
Answer Carlos, Not sure I understand your use of the terms "simple vs. average daily balance". Most usage of these terms are interchangeable. Most if not all monthly pay auto loans these days have interest computed on the average (daily)principal balance. Additional principal payments will cause more of the subsequent payments to be credited to the principal balance,causing the loan to be paid off sooner with a savings in interest paid. Jim
