A simple interest loan is one in which the interest has been calculated by multiplying the principal P times the rate r times the number of time periods t. Payment Loan Amount i 1 i n 1 i n 1. Simple interest is calculated only on the original sum of money which is known as the principal.
The bank plans to pay 2 interest per year on the deposit of 100.
With most car loans interest is calculated on the principal loan balance on a. A simple interest loan is one in which the interest has been calculated by multiplying the principal P times the rate r times the number of time periods t. The simple interest formula is used to calculate the interest accrued on a loan or savings account that has simple interest. Youll find simple interest loans offered by a variety of loan products including car loans.