Loan interest is the extra amount you pay when you borrow money. It is usually calculated as a percentage of the loan amount.
There are different ways to calculate interest, but the most common method is simple interest.
Interest = (Loan Amount × Interest Rate × Time) ÷ 100
If you borrow 1,000 at 10% per year for 2 years:
Interest = (1000 × 10 × 2) ÷ 100 = 200
Total repayment = 1,200