For a large proportion of loans, why is interest paid on the outstanding amount instead of the entire amount of a loan?
For example, for a 100.000 loan with a 10% interest, basic logic would imply that you have to pay back 110.000. But you usually pay less because your first repayments contain more interest which decreases as the remaining amount of the principal decreases.
I imagine that when loans were first invented, that's how they worked. I doubt goldsmiths would build a repayment calendar for their borrowers. You knew what you had to pay back by a simple multiplication operation. Now the financial products are more complicated and need more complicated calculations to know what you need to pay back.
What are some of the reasons a lot of loans work like this now?