Bedtime Stories
How is interest on an Affirm loan calculated?
Affirm calculates the annual percentage rate (APR) of a loan using simple interest, which equals the rate multiplied by the loan amount and by the number of months the loan is outstanding.
This model differs from compound interest, in which the interest expense is calculated on the loan amount and the accumulated interest on the loan from previous periods. Think about compound interest as “interest on interest,” which can increase the loan amount. Credit cards, for example, use compound interest to calculate the interest expense on outstanding credit card debt.
Recent Articles
Subscribe to our Bedtime Stories
Be the first to hear about new product updates, industry news, curated OkiOki stories, and everything in between. And don’t worry, we won’t clutter your inbox.
By submitting this form, you agree to receive recurring automated promotional and personalized marketing text messages (e.g. cart reminders) from OkiOki at the cell number used when signing up. Consent is not a condition of any purchase. Reply HELP for help and STOP to cancel. Msg frequency varies. Msg and data rates may apply. View Terms & Privacy.