Saw a meme with a guy paying back a $32,720 loan with a 30% interest rate and people in the comments said he’s gonna nearly 100 grand, or an extra 37k. How does interest actually work cause I’d assume the 30% meant 30% of the 32 grand?
In: Economics
Interest is typically expressed as an annual rate, not a fee over the lifetime of the loan:
In this case, with a 30% interest rate, each dollar borrowed that hasn’t been paid back will be charged 30 cents per year until it is
(In actuality, interest is usually calculated monthly or daily, but point still stands)
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