Interest rate is the amount in exceed you have to pay when you pay something not in cash, or when you take a loan. So say you take a loan of $1000 with an interest rate of 10% for 10 months, you have to give back those $1000 plus the interest, in this case, the 10% of $1000, $100. As you took it for 10 months, you have to pay $110 each month. It's the same with a credit card
This example was just illustrative, I know there are no 10-month loans and no 10% interest rate in loans
So your telling me that if I took out a loan for $1000 and the interest rate is 10% for 10 months. I have to give them back the $100 plus the interest?
So my payments would be say for example I'm giving them back $100, I would also have to pay $110 which makes it $210 I'm actually paying them a month?
This example is not compound interest, but I will keep with the example he presented.
What he is saying, is if you took out $1000 loan from your parents, and they charged you 10%, you would owe them a total of $1100. $1100 divided by 10 months, means you will have to pay them $110 a month.
Sadly, real interest is a lot scarier, so I would suggest living your life paying as little of it as posable. (don't live off of credit)
I'm understanding you clearly now..And I will go step by step on what you said.
1) My parents gave me a loan of $1000, and they charged me 10% interest
2) I now owe them $1100 because of the added 10% interest ($1000+.10=$1100)
3) My term is then 10 months. I will then divide how much I owe them by the amount of months ($1100/10) and get $110 I owe them per month.
Is that right?