Definitions for "Add-on interest"
When interest is added to the amount borrowed. For example, a $5,000. 00 loan at a 10% nominal rate for one year would have the $500. 00 interest added to the loan amount. The base loan amount would be $5,500. 00, but the borrower would actually receive $5,000. 00 at closing.
Interest that is calculated on a loan, then added onto the principal to obtain the loan amount.
Interest that isn't paid by the debtor, but added to the principal amount.