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  3. in a discount interest loan, you pay the interest

In a discount interest loan, you pay the interest payment up front. For example, if...

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Finance

In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $16,000 and the interest rate is 10.75%, the borrower pays0.1075\times $16,000= $1,720 immediately, thereby receiving net funds of $14,280 and repaying $16,000 in a year.

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