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To find the simple interest, we can use the formula:

\[
I = P \times r \times t
\]

Where:
- $I$ is the interest.
- $P$ is the principal amount (initial loan).
- $r$ is the annual interest rate (as a decimal).
- $t$ is the time the money is borrowed for (in years).

From the problem:
- $P = 1250$ dollars
- $r = 2.5\%$ or 0.025
- $t = 4$ years

Now, substituting into the formula:

\[
I = 1250 \times 0.025 \times 4 = 125
\]

So, the simple interest due is **$125**.

Would you like more details on this? 

Here are five questions you might want to explore further:
1. How is simple interest different from compound interest?
2. What would be the total amount paid after the interest is added to the principal?
3. How would the result change if the interest rate was compounded annually instead of being simple?
4. What would be the interest if the loan duration was 5 years instead of 4?
5. How is the formula adjusted if the interest rate is compounded monthly?

**Tip:** Always convert percentage rates into decimal form by dividing by 100 before using them in calculations!

Find the simple interest due (in dollars) on a 4-year loan of $1,250 if the annual simple interest rate is 2.5%.

Learn how to calculate simple interest for a 4-year loan of $1,250 at an annual interest rate of 2.5%. This problem teaches the application of the simple interest formula and is suitable for students in Grades 6-8.

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