Always ask for the total in dollars
"1.5% a month" does not tell you what you will repay. "You borrow $200, you repay $212" does. A licensed lender must give you this figure in writing before you sign. If they cannot, walk away.
Interest on the original amount vs on what is left
"Flat" interest is charged on the original amount every month, even after you have repaid half. "Declining" interest is charged only on what you still owe. At the same rate, flat can cost nearly twice as much over a year.
Fees that are not interest
- Admin or processing fee, usually 1 to 3%, taken up front
- Insurance, sometimes compulsory
- Late fee, per day or per missed payment
- Early repayment fee, which should not exist
- Cash-out or transfer fees
The real cost
Add up everything you will pay, subtract what you actually received in your hand. The result is the cost. Compare that number between lenders, not the interest rate.
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