# How to calculate loan interest rate?

By | January 16, 2023

Now a days, Many financial institution provide a short time loan amount with some interest percentage.

When we borrow something then along with that you have to pay some interest rate.

Most financial institutions charge the same interest rates And there are many hidden charges.

So you need to find out for loan interest value.

Some factors use to calculate rate of interest.

• Cibil Score
• Principal Amount
• Repayment and tenure

This is a factors to main factor to calculate rate of interest.

## What is loan in simple words ?

A thing that is borrowed, especially a sum of money that is expected to be paid back with certain interest amount that called loan.

When we borrow something like iPhone, Android phone on online shopping cart.

At that time the online shopping store like Amazon provide some offer on credit card and NetBanking.

Also he provide the facility for borrowed on EMI service.

Therefore you should know, what is amount charged for interest.

## Types of interest in india

There are two types of interest rates, first is Fixed interest rate – This type interest rate is fix and doesn’t change any time.

Second is Variable interest rate – In this terms interest rate change on market movement.

## How to calculate interest rates on loans?

The interest on financial loan amount or any debt is calculated by following trick.

For examples.

Lets assuming I have borrowed 10,000\$ at a rate of interest of 15% p.a. and loan tenure is 5 years.

The first installment calculate by following steps.

The total payable amount is Sum of interest and principal amount by follows.

n = 5 × 12 = 60 months
i = 5% / 100 / 12 = 0.004167 interest rate per month

Using this formula you can also calculate the Interest rate.

You can also use the following calculators.

Disclaimer : This calculator use only for information purposes not a investing or borrowing purpose.

Please check it the officially (where you have applied for loan) interest rate and other information while you are borrowing any amount.