Timeline for Why is interest paid on the outstanding amount instead of the whole amount of a loan?
Current License: CC BY-SA 4.0
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| Nov 20, 2019 at 15:25 | history | edited | glglgl | CC BY-SA 4.0 |
added types of loans
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| Nov 20, 2019 at 15:20 | comment | added | glglgl | @DStanley Of course it is. But you wouldn't be happy if I extended this time to 20 years. And some contracts indeed are this way: early payments are either not possible at all or come with a penalty which includes the expected interest of the borrower. | |
| Nov 20, 2019 at 15:18 | history | edited | glglgl | CC BY-SA 4.0 |
added types of loans
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| Nov 20, 2019 at 15:16 | comment | added | D Stanley | One could argue that an "annualized" rate is just a market convention. I could set up a loan where you owe be 10% of what is borrowed whether you paid it off in one day or 10 years. | |
| Nov 20, 2019 at 15:14 | history | answered | glglgl | CC BY-SA 4.0 |