Is a company: no
Is a proper noun: no
- straight interest
- plain interest
- non-compound interest
Definition of Simple Interest
- Interest that is calculated only on the principal balance, without compounding.
Related Terms and Acronyms
- Compound Interest — Bank,
- Interest that is calculated by adding the interest earned in the current period to the principal and figuring the next period's interest on this "compounded" total amount.
- Principal — Bank,
- The original balance of money lent on an outstanding loan and fees, excluding interest. Also the remaining balance of a loan, excluding interest.
- Interest (int, IN) — Bank,
➥ Bank account transaction code.
- Money paid for the use of borrowed funds, usually expressed as an annual percentage.
- Interest Rate (IR) — Bank, Very Important,
- The rate a lender charges an individual to borrow money.
- Loan — Bank,
- Letting another party use something of value temporarily.
- Amortization — Bank,
- Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.
- Simple Interest Loan — Bank,
- A method of allocating the monthly payment between interest and principal. The interest charged is determined by the unpaid principal balance on the loan, the interest rate, and the number of days since the last payment. The rest of the payment goes to the principal. Making early payments or additional payments reduces the loan's principal and cuts the total interest paid over the life of the loan.
- Annual Percentage Rate (APR) — Bank, Very Important,
➥ A number used to compare costs associated with mortgage loans and other forms of financing.
- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.
- Level Payment — Bank,
- A method of repayment where periodical payments of principal and interest are made in a certain way so the payment amount remains constant.
- Compounding Method — Bank,
- Used in Bank rate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.
- Annual Percentage Yield (APY) — Bank,
- The percentage, required by Truth in Savings regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution's compounding method, assuming funds remain in the account for a 365-day year.
- Accrue — Bank,
- To gather together an amount often over a period of time.