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.

Today, In this article we learn about How to calculate loan interest rate?

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.

Read this article 1 Credit Card Build Excellent Credit

## Define loan term

First we have to know more about loan.

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 rate

There are 2 types for calculate interest rate.

They are following.

- Fix interest rate – This type interest rate is fix and doesn’t change any time.
- Variable interest rate – In this terms interest rate change on market movement.

## How to calculate loan interest rate?

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

P | Principal Amount ( Borrowed Amount) |

R | Rate of Interest (Annual) |

N | Numbers of Installments ( loan tenure in month) |

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.

Loan Amount (P) | 10,000$ |

Interest rate (R) | 15% per annual |

Tenure (N) | 60 Month |

EMI installment | 237.90$ Per month |

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

Principal Amount | 10,000$ |

Interest Amount | 4273.96$ |

Total Payable Amount | 14,273.96$ |

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.

- Income tax calculator
- Provident fund calculator
- Personal budget calculator
- Crorepati Dream planner
- Risk assessment Calculator

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.

## Important FAQ

### which payment method charges the highest interest rates?

Payday loans charges the highest interest rate.

### is 771 a good credit score for personal loan?

Sure 771 is a good credit score to get personal loan.

I hope you have understood How to calculate loan interest rate?