You obtain a loan of $3,000 to be repaid over one year. Assume you are charged 12% interest based on the add-on method. You monthly payments would be

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The add-on method calculates interest on the full amount of the loan for the entire term of the loan. In this case, the interest is $3,000 x 0.12 = $360. The total amount to be repaid is $3,000 + $360 = $3,360. The monthly payments would be $3,360 / 12 = $280.

You Obtain a Loan of $3,000 to Be Repaid Over