What is interest on a loan?
Interest is the cost of borrowing, expressed as a rate and charged on the amount you owe. How it is calculated — flat or on the reducing balance — affects how much you repay in total.
Ndzinga Knowledge Centre
Credit Education
The fundamentals of credit scores, interest and repayment.
- NCR-registered credit provider
- National Credit Act aligned
- Plain-language financial education
Educational content from a registered credit provider — NCR Reg: NCRCP22127 · FSP: 55648
Credit can be a useful tool once you understand how it works. This section covers the fundamentals — what interest is and how it accrues, the difference between flat and reducing-balance pricing, what a repayment schedule shows, and how the total cost of credit adds up. The goal is plain-language understanding so you can read any credit agreement with confidence and compare offers on a like-for-like basis. Everything here is general education from a registered credit provider, not personal financial advice.
Credit Education articles
Credit Education — common questions
What is the total cost of credit?
It is the full amount you repay over the life of the loan: the principal plus interest, initiation and service fees, and any other disclosed charges. A registered lender must disclose it before you sign.
What is the difference between flat and reducing-balance interest?
Flat interest is charged on the original amount for the whole term; reducing-balance interest is charged only on what you still owe, so it falls as you repay. The two can produce very different totals.