add-on interest

add-on interest definition - business

add-on interest

Interest that is calculated on and added to the original principal of a loan. Add-on interest essentially increases the amount of the loan and results in a stated interest rate that is artificially low. For example, borrowing $1,000 for one year at add-on interest of 8% would result in an original balance of $1,080 and monthly payments of $1,080/12 , or $90.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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