Assuming I borrow $50000 from the bank where the details are as follow
Loan amount : 50000 Annual interest rate : 6% Repayment mode : At then end of the month Loan repayment period : 60 months
Using MS Excel whereby I utilise the PMT method :
I have to make a monthly repayment of $966.64
However if repayment mode is at the start of the month utilising the PMT method :
I have to make a lower monthly repayment of $961.83
Can any kind soul explain to me why it is cheaper to repay the loan at the start of the month??