vania-janet/multiturn-rag-retrieval-data huggingface dataset:
The principal and interest are fixed, no matter how much money you throw at them. This is not correct. If I pay an extra $1000 in principal this month, then my mortgage balance is decreased. So slightly less interest accrues before my next payment. That means my next payment will be slightly more toward principal and slightly less toward interest than it would have been if I hadn't made an extra principal payment. This means that my principal will eventually drop to zero earlier than it would have if I had not made the extra payment, and I will end up making fewer total payments than I would have without the extra principal payments. Of course, the effect is even stronger if I make regular extra payments rather than a single one. Like paying off any debt, you can consider this payment essentially a risk free investment paying whatever is the interest rate on that debt. You know that by making this payment, you reduce your interest payments over the coming years by the interest rate on that amount.  Edit: In comments you said, you will pay your mortgage off earlier but you won't drop the amount required to pay each month. Look at a mortgage amortization table to see this. This isn't because of the amortization table, it's because of the contract terms between you and the lender. After you make an extra principal payment, a new amortization schedule has to be calculated one way or another. It would be possible to re-calculate a new reduced monthly payment keeping the number of payments remaining fixed. Or you can calculate a new repayment schedule keeping the total monthly payment fixed and reducing the number of payments.  It happens the banks prefer to do the 2nd of these rather than the first, so that's the terms they offer when lending. Perhaps someone more knowledgeable can comment on why they prefer that.  In any case, by reducing your principal you improve your personal balance sheet and build equity in the mortgaged property so that, for example, if you sell you'll keep more of the proceeds and use less to pay off your loan.
"Your first question has been answered quite well already. To answer your second question: ""If you pay extra, do you want the extra to go toward the interest or   toward the principal?"" This gives the consumer some flexibility to decide how additional payments are applied. It might seem like a no-brainer to always apply extra payments towards principal - that way, the interest amounts on future payments will be lower and (if you're billed a fixed amount each month) more of each regular payment will then be applied to principal, shortening the term of the loan. However, while it would mean spending more over the life of the loan, there are certain advantages to applying extra payments towards interest†. The main advantage is that it pays your account ahead and means you don't have to make another payment as soon. You could use this strategy to give yourself a buffer of several months, so that if you should ever run into financial hardship you can stop making mortgage payments for a while without the risk of foreclosure. † Note, in most cases it's more likely that you are simply paying more without specifying to the lender that it should be used as principal curtailment. I haven't seen cases where you can explicitly ask the extra to be ""applied toward interest"". In this situation the funds would be held until you've provided enough to cover one or more monthly payments in full, at which point your ""next payment due"" date will simply be extended.  Another advantage is that the funds that are being held (not due yet, not allocated toward any specific payment, maybe held in escrow) may be refundable to you, upon request. This would depend on the lender's policy. Some will permit refunds of credit balances that go beyond what is necessary to cover the current month's bill. Whether you apply extra payments towards principal or not, it makes little difference to the bank. Any additional payments received increase their immediate cash flow. The cash can be reinvested immediately by them into whatever they are currently focusing on."
No, because of the balance transfer fees, which could be 4%. Unless of course you get a deal for 12 months of no payment, and you pay it back in 12 months, in which case a 4% annual interest rate is much less than a loan! At that point you are gambling that you will be responsible with the payments, and the card company is taking the opposite bet.
it is possible that if you do not accept the offer, they will try offering you an even lower rate.  if they offered you close to 0%, you could start carrying a balance and find a better use for the cash you would have spent paying it off. there are plenty of investments with a guaranteed return of over 0%. personally, i am using a 0% offer from one of my cards to invest in the stock market.  i might lose that bet, but on average over the last 10 years, i have not. a pretty safe bet would be paying down your mortgage, or buying a cd that matures when the offer ends. that said, even a 10k$ balance might only pay you around 300$. is that worth the hassle to you?
Mathematically, this makes sense, but legally, the loan department will say you're in breach of your contract. Let's pay a little less and see what happens. If you pay exactly the interest owed = (p*I)/12, you would have an infinite duration loan where your principal outstanding would always be the same as your initial principal or the initial amount of your loan. If you pay less than the interest owed, you will actually owe more every month. In other words, your principal outstanding will increase every month!!! This is called negative amortization. Of course, this includes the case where you make zero payment. You will owe more money every month. Of course, for most loans, you cannot pay less than the required monthly payments. If you do, you are in default of the loan terms. If you pay more than the required monthly payment, you shorten the duration of your loan. Your principal outstanding will be less by the amount that you overpaid the required monthly payment by. For example, if your required monthly payment is $200 and you paid $300, $100 will go into reducing your principal outstanding (in addition to the bit in the $200 used to pay down your principal outstanding). Of course, if you hit the lottery and overpay by the entire principal outstanding amount, then you will have paid off the entire loan in one shot! When you get to non-standard contracts, a loan can be structured to have any kind of required monthly payments. They don't have to be fixed. For example, there are Balloon Loans where you have small monthly payments in the beginning and large monthly payments in the last year. Is the math any different? Not really - you still apply the one important formula, interest owed = (p*I)/12, on a monthly basis. Then you break down the amount you paid for the month into the interest owed you just calculated and principal. You apply that principal amount to lowering your principal outstanding for the next month.
"You should be able to pay back whenever; what's the point of an arbitrary timeline? Cash flow is the life blood of any business.  When banks loan money, they are expecting a steady cash flow back. If you just pay back ""whenever"" - the bank has no idea what they'll be getting back month-to-month.  When they can set the terms of the loan (length, rate, payment amount), they know how much cash flow they expect to get.  What does [the term of the loan] even mean and what difference in the world does it make? In addition to the predictable cash flow needs above, setting a term for the loan determines how long their money will be tied up in the loan. The longer a bank has money tied up in a loan, the more risk there is that the borrower will default, so the bank will require a greater return (interest rate) for that extra risk. What you have described is effectively a revolving line of credit.  The bank let you borrow money arbitrarily, charges you a certain rate of interest, and you can pay them back at your schedule.  If you pay all of the interest for that month, everything else goes to principal. If you don't pay all of the interest, that interest is added to the balance and gets interest compounded on top of it.  Both are perfectly viable business models, and bank employ them both, but they meed different needs for the bank.  Fixed-term loans help stabilize cash flow, and lines of credit provide convenience for customers."
"Your thinking is unfortunately incorrect; an amortising loan (as opposed to interest only loans) pay down, or amortise, the principal with each payment. This means that the amount that is owed at prepayment will always be less than the total borrowed, and is also why some providers make a charge for prepayment. The ""fairness"" arguments that you make predicated on that misunderstanding are, therefore, incorrect."
As mentioned in other answers the interest you make is negligible and the calculations would depend on the bank. In saying that the general trend is calculate daily, pay monthly.  A typical scenario would be that every night at midnight the interest for your account at that point in time is calculated. This occurs every midnight and at the end of the month the sum of those calculations will be added to your account. You could have had several significant transactions pass through your account in one day although if the interest is calculated at a specific point in time some transactions may not contribute to any interest. These calculations are worth thinking about,  even in circumstances of negligible returns, as it could assist when considering combining credit cards with home loan offset accounts so it is not a complete waste of time to understand how interest is calculated. The more you know ;)
It looks like you'd just be charging yourself interest and paying yourself back, because it's a pass-through entity, as I'm sure you know.  (This assumes you're the only member of the LLC.) It all depends on how much money you want inside the protective cover of the LLC, and for how long.  It doesn't seem to make much difference how you get the cash in or out, or how complicated or easy you make it for yourself.
If you have a debt that has very low interest now, but you are aware that it's not going to stay that way (0% introductory APR on a credit card, for example), it can make sense to pay that off before the higher rate kicks in.
The first thing is to look at the monthly cost of the loan. The one from the company is interest free. While it is unlikely that a bank will have a zero percent loan, you will also have to look at what the seller will offer.  The next thing to look at is the term of the loan. When comparing two loans with the same interest rate the shorter term loan will cost more per month. Many times when an auto dealer offers a zero percent loan they also  have a very short term: 12-24 months; Many people can't afford the monthly payments with that short a term.  You said you could afford to save the other $2000 in about six months. That means you could set aside $333 a month to do it in six months. If the loan from the employer has a term longer than 6 months you should be able to afford the loan. Keep in mind that the employer will probably be taking the money right out of your paychecks.  You do have to look at the conditions attached to the loan. What does accepting the loan do to your employment situation? If you leave early do they want you to pay it back in 30 days, or will they take the rest from the final paycheck, or do you have longer?  You do have to look at the term of the loan, and see if you can pay it off early. If they require a 12 month term can you end it earlier, or change the monthly payment to end it early? The reason why you care about the term is that if the term is 24 months then after a year you still owe them $1000; which if you have to pay back immediately if you quit, it may make it hard for you to leave the company. A minor note: They probably are not reporting it to the credit reporting agencies therefore it wont help your credit score. This is probably not a big issue since you are considering going without a loan.
You're looking for the amortization calculation. This calculation is essentially solving for the series of cash flows that will yield a zero balance after the specified term, at the given rate for a loan amount. Once you have solved for the payment amount, you can add additional principal amount to each payment period and see the interest payments and time to zero balance drop.
I mean, at a personal level, I do this all the time. I will absolutely take advantage of low interest financing offers if I know I can make more money with the outstanding balance than will be drawn in interest.  It can also make sense from a risk management perspective: I need liquidity even if I can cover the cost, I anticipate needing a large sum of cash over a short interval during the finance period. If I were to pay all upfront the cumulative expenditures would Darwin me too close to my safety threshold for my comfort level, but by financing I can distribute the risk and keep a higher margin for error over the course of the loan.
"Typically, there are three ways an acquisition is financed. What is used is called the ""consideration"".  1.) Cash - Existing cash on the balance sheet is used. Think of it like purchasing something with your debit card.  2.) Stock - This a bit more complicated. The acquiring company issues new shares and exchanges those shares for shares of the acquiree. Because new shares are issued, this can have a dilutive effect on the stock price of the acquirer. However, it can have an accretive effect if enough synergistic value between the two companies is realized and/or expected.  3.) Debt - Basically like taking out a loan.   The ""consideration"" for a deal is often reported, as you read in your article.  Most deals are a combination of cash/stock/debt. (Debt is often referred to as ""cash"" - i.e. if you take out a loan, you are essentially receiving cash.)    When it comes to which is best to use, there are quantitative analyses for that - with a specific focus on the acquirer's EPS (Earnings per share) post-deal.  The factors that are considered are the forgone interest on cash, the additional interest gained from taking on debt, and the dilutive effects of issuing new stock. There is no right answer for which is best, as there are multiple different factors and circumstances involved across M&amp;A deals. Each company has different borrowing rates and synergistic value expected from their deals. One big factor is the timing and stock price of both companies during the deal. If the acquirer is trading at an all time high and the acquiree is at an all time low, then perhaps an all-stock deal would be advantageous to the buyer.   Typically, companies want to avoid stock deals because they are the most dilutive."
Interest is a fee that you pay in order to use someone else's money. Once you've made the deal, pretty much anything you do that reduces the total interest that you pay does so by reducing the time for which you get to use their money. As an extreme example, consider a thirty-year interest-only loan, with a balloon payment at the end. If you pay it off after fifteen years you pay half as much interest because you had the use of the money for half as long. The same thing happens when you make biweekly payments: you reduce the total interest that you pay by giving up the use of some of the borrowed money sooner. That's not necessarily bad, but it's also not automatically good.
Liquidity Say you have $50k in student loan debt.  You come into a large amount of money and throw $10k at it.  Yes, it's now down to $40k, saving you a lot of money in interest over the long run, but it's money you can no longer 'use'. Now if you invest that same $10k instead, you still potentially have access to it if needed. Paying $10k towards a debt at a 5% interest rate has essentially the same rate of return as investing the $10k at a 5% return.  You're 'making' the same amount of money either way.  But if you say, get laid off or need money for medical expenses or a down payment on a house, you can tap into that $10k investment if needed.  It is a liquid asset.
You're not missing any concepts! It sounds like you are contributing a piece of collateral to the business, and you want to know a fair way to value how much this contribution of collateral is worth. Technically the economic answer would be the difference in interest between a secured loan and an unsecured loan.  So for example suppose that the business could get a loan at 17% without the collateral (maybe just on a credit card) but with the duplex as collateral it is able to get the loan at 10.5%. In principle, the value of this collateral is (17% - 10.5%) or 6.5%, because it has allowed the business to pay 6.5% less interest on its loan.
If the market rate and coupon were equal, the bond would be valued at face value, by definition. (Not 100% true, but this is an exercise, and that would be tangent to this discussion).  Since the market rate is higher than the coupon rate, the value I am willing to pay drops a bit, so my return is the same as the market rate.  This can be done by hand, a time value of money calculation for each payment. Discount by the years till received at the market rate to get the present value for each payment, and sum up the numbers.  The other way is to use a finance calculator and solve for rate.  The final payment of $10,000 (ignore final coupon just now) is $10,000/(1.1^5). In other words, that single chunk of cash is worth 10% less if it's one year away, (1.1)^2 if 2 years away, etc.  Draw a timetable with each payment and divide by 1.1 for each year it's away from present. If the 9% coupon is really 4.5% twice a year, it's $450 in 6 month intervals, and each 6 mo interval is really 5% you discount.  Short durations like this can be done by hand, a 30 year bond with twice a year payments is a pain.  Welcome to Money.SE.
Another, perhaps simpler approach to the same result as @BenMiller. Firstly, if you can pay off the debt today, for 1695.70 cash, then that is the amount of your debt to the hospital.  There is no such thing as a discount for cash; just extra money to pay if don't pay immediately.  This extra money is called interest, and the hospital is indeed charging you interest. Use any mortgage program to find the interest rate if you pay off a debt of 1695.70 with 60 monthly payments of 37.68.  The program should tell you that you are paying 12.64% effective annual interest. If you can earn more than that, after taxes, with your money somewhere else, then invest the cash there and pay off the hospital over time.  If you can't, then pay off the debt immediately, and avoid writing 60 cheques. EDIT:  Incorrect calculation revised as per @Ben Miller
Welcome to the world of personal finance.  IMO, you are heading for trouble. To answer your question, the APR is the annual percentage rate, or what you pay to borrow money from the CC issuer.  For example, if you charge $100, and the bill comes, and you pay $100 on or before the due date you pay nothing.  If you pay the minimum payment, which would be around $15, you would then borrow $85 (100-15) and pay interest on that amount.  The next month's balance would be 85 + any new charges + interest.  The interest in this case can be estimated as follows:  85*.199/12 = 1.41. For your information that is a very high interest rate especially given the current market for borrowed money.  Many people become saddled with debilitating debt starting off just like you are planning.  If we were friends, I would implore you not to get a CC, instead save up and pay for things with cash.
"I took the quiz that you linked too and answered with what I considered ""ideal"" answers with the exception of checking C for that particular question.... The first thing I saw was I needn't have bothered with giving the ideal answer as the result is self graded (paraphrased) as...all ""A"" great, mostly ""A"" good,  mostly ""B"" you can do better, any ""C"" you probably have problems...regardless of your actual answers. Secondly my ideal answers didn't agree with theirs. Finally, neither my ideal nor theirs takes actual circumstances into account.  For instance paying off your debt each month: there are quite a few cards that offer zero percent financing for extended periods of time, for those cards the ideal would be for the debt to be paid off before the terms change.  Whether that should be steady progression towards zero or a ballon payment at the end, would depend upon your circumstances. In short, look at this quiz as a rough guideline, not a nuanced evaluation of your credit handling capabilities."
There is a reason - your credit score. If you ever take out a mortgage, you might pay dearly for your behavior. The bank where you have the credit card reports the amount on the bill to the credit rating agencies. If you pay before the bill date, they will always report zero. You should wait at least till the day after the billing cycle ends, and then pay off (you don't need to have the paper bill in your hands - you can see online when the cycle closed). Depending on your other financial behavior, this will have between zero and significant effect, on the percentages you get offered for car loans, mortgages, etc.
"Not to state the obvious, but whenever an investment is being made, the ""nuts and bolts"" is your return on investment. Analyzing the rate of return on an investment is the primary factor in any decision. Ideally, once the actual mechanics of investment and side ""benefits"" are factored out, the goal is to be able to analyze the pure financial return. Usually the biggest problem faced in analyzing various investments is comparing the Present Value of an investment to a series of payments that may be made or received in the future. When considering the purchase of a large equity, for example, you might be looking at what series of payments are required to purchase the asset. You can also reverse this and ask, ""What amount of money is equivalent to this series of payments?"" Ultimately, the Present Value of an Annuity is the way to make these comparisons equal. Fundamentally, the Present Value of an annuity is an amount of money that should, in theory, be equivalent to a series of payments. There is, for example, technically no difference between $1064.94 today and $100 a month for a year, at an interest rate of 1% per month. Grant you, most people would be happier with the money now, but that is what interest does - it compensates you for waiting on your money. You can fire up a spreadsheet and calculate the Present Value as long as you have the monthly payment, interest rate, and number of periods. Alternatively, you can calculate any one of those missing four variables - and the key is usually to understand what that rate would be in order to compare the investments. Finally, the taxable implication is really just an adjustment to the rate of return. Imagine the following three scenarios: (Obviously the rates are fictional - the goal is to show they are the same). Scenarios 1 & 2 are really just two sides of the same coin. Using the Future Value formula in Excel = FV(0.5%, 12, -100), you get $1233.56. In scenario 1, you would have $1233.56 in your bank account. In scenario 2, your bank would have $1233.56 from you, and you would have $100 less debt per month. They are equivalent transactions.