What is Interest?

Simply put, an interest is money paid as a result of borrowing money. It is usually charged in percentages of the amount that was owed. It can be expressed as an annual percentage (per annum) or it could be charged monthly. Interest can also be the money you receive on lent or invested money.

Some of the key things that affect interest rates include inflation rate, length of time, liquidity and risk of default. Every time you borrow money from Goldmine or any other financial institution, there is an interest charged on the amount that you borrow (called the principle).

The interest rate on a loan is important to understand before you take out the loan because it could affect your pay-back time and terms. The interest rate is what actually determines the total amount of money that you will be paying back to the individual or entity that lent you money.

The good news is, no matter what amount of interest you have on your loan, there is a solution. The thing about interest is that, in most cases, it compounds. The longer the amount of time taken to pay back the loan, the more the interest on the loan is likely to grow. So, here’s a little tip from us to you- pay the loan off quicker so as to avoid that compound interest. Need some more detail on that? We’ve still got more to share. Here are a few things we recommend to help pay-off your loans in time:

• Start with the more expensive ones first if you have more than one loan/debt. This is usually the hardest one because it’s bigger, but the moment it’s over. The debt mountain suddenly looks like a hill, or even a slope- not as overwhelming and easy to get over.
• Pay more than the minimum. Loans usually come with a minimum monthly payment amount. If you can figure out a way to pay more than the minimum required fee (even if it’s by a small amount), you’d have figured out how to pay your loan off quicker.
•  Pay more than once a month. If you have the option to do this, you should totally get it done. Instead of paying towards your debt once a month, you can do it twice a month or as many times as you are able.

Compound interest is one of the things that can make the loan and loan-repayment process hectic and avoidable for many, but we think that if you plan such occurrences and figure out how to deal with them, you’ll be able to take out a loan and service it well without going into further debt.

We recommend getting knowledge on your loan interest before you take out that loan and find out if it compounds over time or not. All this information will be useful and help you to know if you’re making the right decision as you take out the loan and if you will be able to pay it off on time.

And most importantly, have a plan for paying off your loan before you take out your loan. Don’t wait for the first payment reminder to come in to start thinking about how you can repay the loan.

If you’d like to get more information on our loan products and interest rates, get in touch with someone from our team.

Call +256393518282 or Whatsapp +256776470344.