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How to calculate the interest rate

How to calculate the interest rate

The interest rate to determine the rate of return or deposit amount paid on the loan.

Most people are faced with the problem of calculating the interest on loans or deposits, and bank managers often do not bother explaining.

In this connection it is necessary to know the method of calculating the interest rate.

You will need

  • - Calculator.

instructions

1

Calculate the simple interest on depositcontribution to the bank. This interest rate is charged at the end of the period. For the calculation it is necessary to multiply the value of the annual interest rate on the initial amount borrowed funds and the number of days of the deposit. The resulting value divide by the number of days in a given calendar year and by 100% in order to translate the expression of interest in monetary units.

2

Calculate compound interest on the deposit. This calculation method is used in the case where the capitalization of interest is carried out within the deposit period. To calculate the accrued interest must be the initial contribution multiplied by the annual interest rate and the number of calendar days in the billing period with interest capitalization. Divide this value by the number of days in a given calendar year and by 100%.

3

Calculate the interest rate if annuityrepayment method. To calculate the total amount of overpayment loan you must take one of the product of the annuity factor in the number of repayment periods, multiply the obtained value for the amount of the loan.

4

Find the interest rate differential with therepayment method. The interest in this case is carried out according to the bank's policy. If the bank establishes in lending that year, 12 months, the accrued interest will be equal to the product of the annual interest rate on the loan balance in a given month, divided by 12. If the bank accepts that 365 days a year, it is necessary to multiply the annual interest rate on the balance loan in a given month and the ratio of the number of days in the month to 365.

5

Use the credit calculator. This program can be installed on your computer or use the Internet. Many sites offer the opportunity to the online calculation of interest rates on loans and deposits.

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