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Simple English definitions for legal terms
add-on interest
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A quick definition of add-on interest:
Add-on interest is a type of interest that is added to a loan upfront, meaning it is calculated and added to the total amount borrowed at the beginning of the loan. This means that the borrower will pay interest on the entire loan amount, including the interest that has already been added. It is important to understand the terms of a loan and the type of interest being charged to make informed financial decisions.
An address is the place where mail or other communication is sent. It is important to have a correct address so that mail and packages can be delivered to the intended recipient. In some states, an address can also refer to a formal request made by a legislature to the executive to do a particular thing, such as removing a judge from office. In equity practice, an address can refer to the part of a bill in which the court is identified.
A more thorough explanation:
Definition: Add-on interest refers to the interest that is calculated and added to the principal amount of a loan at the beginning of the loan term. This means that the borrower pays interest on the entire loan amount, including the interest that has already been added.
Let's say you take out a $10,000 loan with a 10% add-on interest rate for a term of 2 years. The interest that will be added to the principal amount at the beginning of the loan term will be $2,000 (10% of $10,000). This means that the total amount you will have to repay at the end of the loan term will be $12,000 ($10,000 principal + $2,000 interest).
Another example would be a credit card that charges add-on interest. If you have a credit card with a $1,000 limit and a 20% add-on interest rate, the interest that will be added to your balance at the beginning of the billing cycle will be $200 (20% of $1,000). This means that if you don't pay off your balance in full, you will be charged interest on the entire balance, including the interest that has already been added.
These examples illustrate how add-on interest works and how it can increase the total amount you have to repay on a loan or credit card balance.