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What is a simple interest loan?

April 26, 2017loan simple

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What is a simple interest loan?

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Simple interest is a method where the payment is allocated between the interest and principal. The interest is calculated based on the Annual Percentage Rate (APR), principal balance, and the number of days between each payment. Interest accrues on a daily basis.

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Simple Interest is a method of allocating monthly loan payments between interest and principal. The amount of your payment allocated to interest is calculated based on your unpaid principal balance, the interest rate on your loan, and the number of days since your last payment. For example, if we receive a payment and it has been 29 days since your last payment, then you will be charged 29 days of interest on the unpaid principal balance of your loan. The remainder of your payment is credited to principal and reduces the unpaid principal balance on your loan.

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myAcc.addGroup(‘accordionGroup_1’); In a simple interest loan, interest is calculated as a simple percentage of the principal balance for the number of days covered by the payment. Interest is not compounded, which means that interest is paid only on the principal and not on previously accrued interest. Payments are allocated between interest and principal, first to reduce any interest accruing during the payment period and then to reduce the principal balance.