Assuming you would like an answer to the question and not a blog post on the topic:
Interest is the cost of borrowing money and is typically expressed as a percentage of the total loan amount. For example if you borrow $100 at an interest rate of 5% you will owe $105 at the end of the loan period.
Interest is calculated by multiplying the interest rate by the amount of money borrowed. In the above example 5% (the interest rate) multiplied by $100 (the amount borrowed) equals $5. This $5 is the cost of borrowing the money and is added to the total amount owed.
Compound interest is when interest is calculated on the original loan amount as well as any interest that has already been paid. This means that the longer you take to repay a loan the more interest you will end up paying.
Simple interest is when interest is only calculated on the original loan amount and not on any interest that has already been paid.
You can avoid paying interest altogether by paying off your loan in full before the end of the loan period.
What is an interest rate?
An interest rate is the percentage of a loan that a lender charges for borrowing money.
How is the interest rate used?
The interest rate is used to calculate the amount of interest that will be charged on a loan.
What factors affect the interest rate?
The interest rate is affected by the amount of money that is being borrowed the length of time of the loan and the creditworthiness of the borrower.
How does the interest rate affect the monthly payment?
The interest rate affects the monthly payment because it is used to calculate the amount of interest that will be charged on the loan.
What is the difference between a fixed interest rate and a variable interest rate?
A fixed interest rate is a rate that will not change over the life of the loan.
A variable interest rate is a rate that can change over the life of the loan.
What is an example of a fixed interest rate?
An example of a fixed interest rate is a mortgage with a 6% interest rate.
What is an example of a variable interest rate?
An example of a variable interest rate is a credit card with a rate that is based on the prime rate.
How does the interest rate affect the total amount of interest paid?
The interest rate affects the total amount of interest paid because it is used to calculate the amount of interest that will be charged on the loan.
How does the interest rate affect the total amount of the loan?
The interest rate affects the total amount of the loan because it is used to calculate the amount of interest that will be charged on the loan.
What is compound interest?
Compound interest is interest that is charged on the principal of a loan as well as any interest that has already been charged.
How does compound interest affect the total amount of interest paid?
Compound interest affects the total amount of interest paid because it is interest that is charged on the principal of a loan as well as any interest that has already been charged.
How does compound interest affect the total amount of the loan?
Compound interest affects the total amount of the loan because it is interest that is charged on the principal of a loan as well as any interest that has already been charged.
What is simple interest?
Simple interest is interest that is charged on the principal of a loan.
How does simple interest affect the total amount of interest paid?
Simple interest affects the total amount of interest paid because it is interest that is charged on the principal of a loan.
How does simple interest affect the total amount of the loan?
Simple interest affects the total amount of the loan because it is interest that is charged on the principal of a loan.
