A loan in which the lender deducts interest from the amount borrowed before the money is advanced to the borrower is called an interest bearing note.

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A loan in which the interest is deducted from the amount borrowed before it is advanced to the borrower is called a discount loan. An interest-bearing note is a loan where the borrower pays interest on the principal amount borrowed, usually in installments over a specified period of time.

A Loan in Which the Lender Deducts Interest from the Amount