How are instalments, interest and penalties worked out?

Steps

1. Reducing balance: equal instalments; each period's interest is the rate on what is still owed (monthly: the yearly rate ÷ 12; weekly: × 7/365; daily: ÷ 365).
2. Flat: interest on the full amount for each period, spread evenly.
3. Fees (processing, insurance) are taken from the amount paid out. A penalty - the product's % of an instalment overdue beyond the grace days - is charged once per instalment, every night.

Good to know

• Interest is recognised in the books when it is paid. The offer shows every instalment, the interest in all and the total to repay.