What is an 'AddOn Interest'
A method of calculating interest whereby the interest payable is determined at the beginning of a loan and added onto the principal. The sum of the interest and principal is the amount repayable upon maturity.
BREAKING DOWN 'AddOn Interest'
For example, let's say Bank A borrows $1,000 for two years from Bank B and that annual interest rates are 9%. Furthermore, Bank A will repay the loan in two equal repayments at the end of each year. The interest charge on the loan is $180 ($1,000 x 9% x 2 years). Adding this to the principal gives a total of $1,180. The annual payment will be $590 ($1,180/2).
When multiple repayments are used in addon interest, the effective lending rate becomes higher than the nominal rate. This is caused the borrower returns a portion of the principal with each payment, but is still being charged interest on the amount of the original loan. In short, if you are borrowing under the addon interest method, you are paying more.

Repayment
The act of paying back money previously borrowed from a lender. ... 
Simple Interest
A quick method of calculating the interest charge on a loan. ... 
Standing Loan
A type of loan where payments are made of interest only. Repayment ... 
Principal
1. The amount borrowed or the amount still owed on a loan, separate ... 
Negatively Amortizing Loan
A loan with a payment structure that allows for a scheduled payment ... 
Interest Rate
The amount charged, expressed as a percentage of principal, by ...

Personal Finance
4 Ways Simple Interest Is Used In Real Life
Simple interest works in your favor when you're a borrower, but against you when you're an investor. 
Economics
Explaining Interest
Interest is the price charged to borrow money, and is typically expressed as a percentage of the principal, or the amount loaned. 
Personal Finance
Simple Interest Loans: Do They Exist?
Yes, they do. Here is what they are – and how to use them to your advantage. 
Personal Finance
Dissecting the Simple Interest Formula
Simple interest ignores the effect of compounding: it's only calculated on the principal amount. This makes it easier to calculate than compound interest. 
Economics
What Does Principal Mean?
For banks, principal refers to the amount due on a loan, and is used to calculate interest payments. 
Credit & Loans
Schedule Loan Repayments with Excel Formulas
Calculate all the particulars of a loan using Excel, and set up a schedule of repayment for a mortgage or any other loan. 
Savings
The Difference Between Compounding Interest and Simple Interest
Interest is the cost a borrower pays to use someone else’s money. Interest can be either simple or compounded. 
Credit & Loans
What is an Amortization Schedule?
An amortization schedule is a table that shows the amounts of principal and interest that comprise each loan payment. 
Investing
Simple Interest
Simple interest is a quick method of calculating the interest charged on a loan. Simple interest is determined by multiplying the interest rate by the principal by the number of periods. 
Credit & Loans
All Your Questions About Loan Interest Rates
If you think interest rates don’t really matter  think again. Interest rates have a huge impact on your finances.

Why does the majority of my mortgage payment start out as interest and gradually ...
When you make a mortgage payment, the amount paid is a combination of an interest charge and principal repayment. Over the ... Read Answer >> 
Why is more interest paid over the life of a loan when it is capitalized?
Learn what it means to capitalize interest on a loan. Understand why more interest is paid over the life of a loan when it ... Read Answer >> 
How can I tell if a loan uses simple or compound interest?
Learn the differences between simple and compound interest and how you can use mathematical calculations and lender disclosures ... Read Answer >> 
When capitalizing interest, will interest accrue while you are in a deferment?
Learn what capitalized interest is. Understand why interest accrues while a person is in a deferment, based on capitalized ... Read Answer >> 
What is the difference between compounding interest and simple interest?
Learn about simple interest and compound interest, how to calculate the two types of interest and the main difference between ... Read Answer >> 
How does accrued interest work on student loans?
Learn how student loan borrowers are affected by accrued interest on outstanding loans balances while in deferment and during ... Read Answer >>