Calculating Charge Given on Borrowed Money Video Lecture - for Grade 7

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now that we got a fair idea about the
concepts of buying and selling of items
making profits and losses respectively
now we will learn about something a
little more interesting and advanced do
you know what happens when you borrow
money from a bank or maybe you borrow
money from somebody who gives you money
for interest so let's take the example
of Bank now sometimes you have a
financial crisis for example you want to
buy a house or you want to buy a car and
you do not have sufficient money to buy
the same so what do you do you go to the
bank you tell the bank that I need some
loan from you and the bank gives you
loan and you can return that loan after
a cup-- I mean over a period of time for
example people who take huge amount for
house loan or to buy a new house so they
return the money over a period of 10
years 15 years 20 years but do you know
why the bank lends you money such huge
amounts even if you need a few lakhs
like 10 lakhs 20 lakhs the bank lends
you money
why because even the band has a benefit
out of it for example let's say that you
are in need of money and the bank says
that ok we will give you money and the
bank gives you X right so let's say that
the amount of money that bank gave you
is rupees X now the amount of money
which you are going to return to the
bank over a specific period of time that
is never X that is always X plus y so
what is this Y this Y is an extra income
for the bank or this Y is the benefit
for Bank and that is why they lend you
money so in simple words this is the
concept that is
and it gives you X maybe bad beats you
hundred rupees and you are supposed to
return that 100 rupees within two years
or three years but when you return it
you have to return 120 rupees so that 20
extra rupees that you gave to the bank
is the benefit for the bank and because
of that extra money only bank gives you
money or bank lends human it is not a
gift
it is basically lending money that is
you are supposed you are borrowing that
money from the bank and you will have to
return that money along with that extra
amount right so here we introduced few
important terminologies with regards to
borrowing of money so the first term is
principal that means the amount which
you borrowed from the bank the money
which you borrowed from the bank for
example rupees X here in this case is
the principal so this is the money which
the bank gave you
next is interest so this is the extra
money to be paid by the borrower so in
this case you are the Warworld because
you are borrowing money from bank so
this why that is the extra money which
you are paying to the bank this y is
nothing but the interest and the third
term is amongst amount is the total
money to be paid back by the borrower so
total money means X plus y so this X
plus y together is all the amount so
principal is the money which bank gives
you interest is the extra money that you
return to the bank and amount is the
total money that you return to the back
so from this we can say that amount is
always equal to principal plus interest
that is the amount is what you return to
the bank this will always be equal to
what the bank gave you plus the extra
money so amount is always equal to
principal plus interest now you might be
thinking while suddenly am I talking
about borrowing money from bank that's
because when we talk about the interests
the interest rates of the banks we talk
about percentages and that is what we
want to introduce here because we have
been
thing about percentages say so we will
introduce the interest percentage as
well so that is why I gave you a brief
introduction of what it is
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