A borrower who only pays interest on the unpaid balance of a loan is paying:

Question

Quizplus · Accepted Answer

Simple interest is calculated based on the principal amount of the loan, and only the interest is paid back to the lender at each payment period. This is in contrast to compound interest, where the interest is added back to the principal and the borrower pays interest on the new, higher balance. Discount interest refers to a kind of interest rate reduction, while "high interest" is a vague term that does not accurately describe the type of interest being paid.

A Borrower Who Only Pays Interest on the Unpaid Balance