Want to know about Simple Interest

Guest

Hello,

I came to know about your site from my uncle. I am thinking to take a mortgage very soon. What I want to know is about simple interest. Your help will be highly appreciated.

Gina

jerry · Posted: Wed Nov 30, 2005 2:30 am Post subject: RE:

Hi,

Simple Interest is an interest, which is computed only on the principal balance.That is, Simple interest = (Principal * Interest * Number of Years).

For example, Kim took a loan of $400,000 for 10 years at 5% interest rate. Therefore,
Simple interest = $400,000 x 5% x 10
Simple interest = $200,000

Thanks,
Jerry

Guest

Hi Gina,

Simple interest is charged on single-payment loans. It is calculated on the principal loan amount during the entire period for which the loan has been taken. The effective rate is similar to the stated rate.

Thanks,
Jill

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