Math CentralQuandaries & Queries


Question from Delbert, a parent:

If my principal balance if $16000.00 and I paid 7% interest per annum but only kept the loan for 6 months How much interest would I owe after 6 months.


The interest is 7% per year so in one year the interest would be

$16000.00 × 0.07 = $1,120.00

In half a year the interest would be half of this, that is

$16000.00 × 0.07 × 1/2 = $560.00

However if you took the loan for a year but paid it off in half a year the lender may charge you a penalty for doing so.


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