Question

Which of the following statements concerning the add-on interest method is true?

O Interest is added to the amount borrowed before the payments are calculated.
O It usually results in a higher APR than the discount interest method.
O The lender subtracts the interest due from the principal before the borrower receives the loan proceeds.
O It results in a lower APR than the simple interest method.

Answer 1

O Interest is added to the amount borrowed before the payments are calculated.