Interest calculated as a percent of the original loan.

Example: a 3-year loan of $1,000 at 10% costs 3 lots of 10%

So the interest is 3 × $1,000 × 10% = $300

(Simple interest is almost never used in the real world, with compound interest being preferred.)

Example: a 3-year loan of $1,000 at 10% costs 3 lots of 10%

So the interest is 3 × $1,000 × 10% = $300

(Simple interest is almost never used in the real world, with compound interest being preferred.)

See: Compound Interest

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