which will pay out more over time simple or compound interest 
compound interest will always pay more after the first payment period suppose you borrow 10 000 at a 10 annual interest rate with the principal and interest due as a lump sum in three years using a simple interest calculation 10 of the principal balance gets added to your repayment amount during each of the three years that comes out to 1 000 per year which totals 3 000 in interest over the life of the loan at repayment then the amount due is 13 000 now suppose you take out the same loan with the same terms but the interest is compounded annually when the loan is due instead of owing 13 000 you end up owing 13 310 while you may not consider 310 a huge difference this example is only a three year loan compound interest piles up and becomes oppressive with longer loan terms 