Best Loan option?, decreasing balance

[practitioner]

I am correct in saying you may get a loan from credit union and pay interest on the decreasing balance whereas with all other institutions, you pay the interest rate on the principle until the loan is cleared? i am thinking about a car loan as opposed to using savings and intend to cash in some shares after a period of time and pay down a sum against the loan.If I go to GE Money, will still be paying the interest rate on the principle until all pain off? I can get a 7.45% rate with them albeit highr with credit union. Maybe I wasn't able to understand or maybe I could not get the info, but I was left none the wiser having spoken to GE.

 

[RainyDay]

In general, no - most bank loans and credit union loans would charge interest only on the outstanding balance. You might get into additional charges with fixed rate loans, but stick with variable (unless you really, really need the security of a fixed payment). Note that if the credit union require you to keep a chunk of money on deposit with them, this is really a 'hidden charge' which is not part of the APR calculation.

 

[dam099]

I thought most/all interest on loans was calculated on a reducing balance basis? If not there would be huge variances in the nominal and APR rates for loans as I'm pretty sure APR would be based on reducing balance.