Simple interest is interest paid or computed only on the original principal of a loan. It is the amount of money that lenders charge for the use of their money. Principal refers to the original amount of money borrowed. Interest, usually shown as a percentage, (for example, 6%) is also expected back in return. When you repay a loan or credit card, part of your payment goes to the principal. Some of it also goes toward paying interest. The loans that we provide are based on simple interest.
Compounding interest is determined when you add the interest earned in the current period with the principal. You then compute the next period's interest on this new "compounded" total amount. With compounding interest, the interest charged on the principal is actually added to your principal for the next period.
Apply Now