difference between true discount and simple interest?

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· commented

· 1 Months ago

True Discount is the method of calculation and collection of Interest upfront from the borrower while disbursing the loan at a specific rate of Interest at the same time same rate of interest is considered for calculating interest on interest and transfer the same to customer
Ex: if the loan amount is 10,000 and Interest amount is 1000 and interest on calculated interest amount is 100 During Disbursement of loan ( 10000-1000+100 = 9100) will be given to the borrower.

In Case of simple Interest Method Interest Amount will be calculated and collected on principal expected/outstanding on schedule due dates.

Difference in case of SI method is Interest is collected on Scheduled dates with principal amount and in case of TD Interest amount is collected upfront and Int on Int is provided to customer.

difference between true discount and simple interest?

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