Add-on Interest
Interest that is computed at the beginning of the loan, then added to the principal, so that all must be repaid, even if the loan is paid off early.
ADD-ON INTEREST - a procedure in which the interest payable during the term of the loan is added to the...
ADD-ON RATE - Interest charged on a principal amount for specified term, regardless of any repayments o...
Add-On Interest. Interest charged on the original principal of a loan, despite a reduction in principal by repayments. Also called Add-On Rate.
add-on interest
finance charges computed by adding the interest payable to the full amount of loan principal. The add-on interest is added to the original principal amount, and becomes a part of the face amount of the promissory note.
Consumer Installment Loans where the finance charges are computed using the Add-on Interest method, and Discount loans, with prepaid finance charges, are loaded in the early months with interest payments that the lender cannot count as income.
 See also: Business plan, Mergers, Finance charge, Acquisitions, Franchise
  
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