Need help making an order Call 0778005532

# How Weekly Financed Payment Plans are Set Up

Opting for weekly payments can provide an effective method to budget and obtain the things you require or desire. Whether you’re considering a subscription plan, rent-to-own arrangement, or a comparable structure, here’s a clear and concise guide on how to purchase an item and manage weekly payments:

Gain a comprehensive understanding of the total cost of the item you have your eye on. Determine the weekly payment by dividing the total cost by the number of weeks you’ll be making payments.

## How Weekly Interest Rate is Calculated

Calculating weekly interest rates involves a similar process to calculating monthly interest rates, but the annual interest rate is divided by the number of weeks in a year (52) instead of the number of months (12). Here’s how you can calculate weekly interest rates:

Get the Annual Interest Rate: Start by getting the annual interest rate associated with the item or loan. This could be a credit card APR, a loan interest rate, or any other form of interest.

Divide the annual interest rate by 52 (weeks in a year) to get the weekly interest rate. If the annual rate is given as a percentage, convert it to a decimal by dividing it by 100 before dividing by 52.

Weekly Interest Rate = (Annual Interest Rate / 52) or (Annual Interest Rate / 5200 if given as a percentage)

Calculate Weekly Interest: Multiply the weekly interest rate by the amount you owe or have borrowed. This will give you the weekly cost of borrowing that amount.

Weekly Interest = Weekly Interest Rate × Principal Amount

Here’s an example:

Let’s say you have a personal loan with an annual interest rate of 10%, and you owe  Ksh 50,000 on that loan. To calculate the weekly interest:

Convert the annual rate to a decimal: 10% / 100 = 0.10

Calculate the weekly interest rate: 0.10 / 52 = 0.00192308 (approximately)

Calculate the weekly interest: 0.00192308 ×  Ksh 50,000 = 90.6154

So, the weekly interest cost for your Ksh 50,000 loan is approximately Ksh 90.6154.

As always, keep in mind that this is a simplified calculation and doesn’t account for compounding interest or other factors that might apply to certain loans or credit cards. If you’re dealing with complex interest structures, it’s recommended to use financial calculators or tools that can handle those complexities accurately.

## Calculate the Total Number of Payments

Multiply the loan term in years by 52 to get the total number of weekly payments over the loan term.

So for a Payment that will take one year the total should be 52 weeks.

## Calculate Weekly Payment

Use the appropriate amortization formula to calculate the weekly payment, taking into account both principal and interest. The formula would be similar to the one used for monthly payments but adjusted for weekly calculations.

Develop an amortization schedule that outlines each weekly payment, breaking down the payment into principal and interest portions. Update the remaining balance after each payment as the loan is gradually paid off.

The borrower makes the calculated payment every week. As time goes on, the proportion of the payment allocated to interest decreases, while the proportion allocated to reducing the principal increases.

Loan servicers, which can be financial institutions or lenders, manage the administrative aspects of the loan, including sending statements that provide payment details, remaining balances, and other relevant information.

## Tips and Recommendations

Borrowers should periodically review their amortization schedule to track their progress and understand the impact of extra payments or changes in interest rates. Consistent weekly payments are essential to keep the loan on track and ensure timely repayment. Missing payments or making irregular payments could affect the amortization schedule.

You can consider or agree with your lender for Biweekly payments: Some borrowers choose to make half of their monthly payments every two weeks (biweekly payments). This approach results in 26 half-payments per year, which is equivalent to 13 full monthly payments. This extra payment each year can help borrowers pay off the loan faster.

Remember that while this process provides a general framework, loan terms, and conditions can vary significantly based on the lender and the type of loan. 