Add-on basis installment loan

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Add-on basis installment loan is a loan which interest is calculated over the life of the loan and then added on to the loan amount. This total amount is paid in equal installments. This raises the effective cost of the loan.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Add-on basis installment loan. Interest is calculated over the life of the loan and then added on to the loan amount. This total amount is paid in equal installments. This raises the effective cost of the loan.

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