Many people are paying hundreds or thousands of dollars more than their original loan amounts because of interest. Unfortunately, many of those people accept interest as the cost of borrowing and using another person’s money. If all of those borrowers understood how interest works, they could be making money rather than paying more and more to lenders.

Understand What Interest Is and How It Works

The first step to reversing this cycle is understanding what interest is and how it works. Lenders calculate a percentage of the money they loan. The borrower pays that percentage, in addition to an amount of the principal, each month.…