<p>say i borrow 20000 dollars at 6% interest.</p>
<p>does this mean i have to pay 1200 a year in interest alone?</p>
<p>Depends, compound or simple?</p>
<p>Moreover, are you making payments back in installments, or do you just pay back a lump sum?</p>
<p>If you're paying back a lump sum at the end, then you can just compute it by:</p>
<p>Compound: 20,000(1.06)^(number of years 'til payoff)
Simple: (20,000 x .06) x (number of years) + 20,000</p>
<p>If you're making payments back at regular installments, you'll have to use a recursion equation. It would look like so:</p>
<p>Un = (1.06)(Un-1) - P ... Uo = 20,000</p>
<p>The subscript n = whatever month/year/day/whatever you want to know your balance in
P = You're installment payment per year/month/whatever</p>
<p>I'm sure there's a website out there to explain everything better.</p>
<p>ya u would have to pay 1200/yr in intrest if you choose to pay while you go to school... there is an option to not pay anything until after you graduate, but if you choose that then the interest accumulates and ends up being more.</p>
<p>I think it depends on what type of loan.</p>