Understanding How Interest Works on Your Fig Loan

Fig loans use simple interest, which means interest is calculated only on your principal loan balance, not on accumulated interest. Understanding how this works can help you manage your loan more effectively and reduce the total cost over time.

How Interest is Calculated

Your annual percentage rate (APR) is divided by 365 (days) to determine your daily interest rate. That daily rate is then applied to your current principal loan balance each day.

For example:

• If your APR is 19.9%, your daily interest rate is approximately 0.0545%
• If your principal balance is $2,000, the interest added to your total outstanding balance each day is about $1.09 (0.0545% of $2,000)

Because it’s simple interest, the amount of interest added each day is directly tied to your unpaid principal balance.

How Payments Are Applied

Each time you make a payment:

1. It first covers any interest that has accrued since your last payment.
2. The remainder is applied to your principal loan balance.

This means:

• If your interest accrued since your last payment is $50 and you make a $300 payment, $50 goes to interest and $250 goes to your principal.

Do Extra Lump-Sum Payments Go Toward Interest?

Yes, partially. If there is any interest which has accrued on your total balance when an extra payment is made, it will be applied in the same way as a regular payment, meaning any interest which has accrued since your last payment will be paid down first, with the remaining amount going towards your principal.

Once any accrued interest has been paid, all extra payment amounts go directly toward your principal loan balance. Reducing your principal lowers the amount of interest that accrues each day moving forward.

Do Extra Lump-Sum Payments Reduce My Interest?

Yes. Making a payment early reduces your principal balance sooner, which means less interest will accrue from that day forward. While it does not reduce your interest rate, it does lower the total amount of interest you’ll pay over the life of your loan.

Can I Renegotiate My Interest Rate?

No. Once your loan is booked, your interest rate is fixed and cannot be changed or renegotiated. If you're interested in lowering your interest costs, making early or extra payments is the most effective strategy.

Recap

• Interest is calculated daily using your APR and current principal loan balance.
• Payments are applied to interest first, then to principal.
• Extra and early payments reduce your principal faster, which helps lower the total interest you’ll pay.
• Interest rates are fixed for the duration of your loan and cannot be renegotiated.

For additional details on how your payments impact interest, or to review your payment history, you can visit your Fig Account.

If you have questions, feel free to reach out to our support team at support@fig.ca.