A level interest amount throughout the life of the loan and which does not take into account that interest can earn interest. That is, not compound interest. For example, if $100,000 is invested at 1% per month over 12 months the investment will show a simple interest return of $12 000 per annum. However, if the interest were kept in the investment account it would earn interest and thus showing a compound amount of $12,682.50pa. That is, a compound rate of 12.68% pa.