Question

A loan is designed as a simple interest loan. This means that the amount of interest paid with each payment will decrease.

True or False

Answer 1

This statement is false.

Simple interest formula = P x i x n
P = Principal amount
i = interest rate
n=number of days between payments

In Simple interest payment is calculated on the Principal amount, and the interest payment is fixed.
Eg - loan $5000 for 3 years simple interest = 5%
interest payment = 5000*5% = 250*3 = 750
Total interest = 750$
yearly interest = 250$

I hope this clear your doubt.

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