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How is interest collected on my loan?

All loans financed through BMW Financial Services are simple interest loans. Meaning you will only pay interest on the time you carry a balance. The annual percentage interest rate, or APR, is a fixed percentage; however the amount of interest that you will pay may vary, because your interest is calculated on a daily value. Your sales contract will list an estimated finance charge. This estimated finance charge is based on you paying your exact payment amount on the due date of every month. If you pay more than the amount due, or pay early, you will pay less interest. If you make your payments late, you will pay more interest. Every month, when you make a payment, the first portion will go towards interest, the second portion will go towards principle. If you pay more than the regular payment amount, the extra amounts will be first applied towards any other charges outstanding, if appllicable. If you do not have any additional charges, the extra amounts will go towards principle. The faster you pay down your balance, the less interest you will pay over the life of the loan.
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