Will I get huge 24% annual interest by lending

[samkapoor77]

I met across a financier who charges Rs. 2 monthly for every Rs. 100 lend. He loaned Rs. 1,00,000 to my friend. That is my friend will pay .02 * 100000 = Rs. 2,000 monthly. With this logic, if I lend Rs. 10,00,000, will I get Rs. 20,000 monthly? Which kind of interest is this?

[Sameer Kapoor]

Your logic is absolutely correct. This is simple interest calculation. One month interest will be Rs. 20,000 for a loan of Rs. 10, 00,000 and yearly interest will be Rs. 2,40,000, i.e. you will get 24% rate of interest annually or 2% per month.

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