divide the interest rate by a hundred, then divide by 12, and multiply the initial loan amount. that’s where you’ll calculate interest rate .when comes to calculate the interest rate. Do you have three questions?
- how did I find my monthly payment; on my loan?
- how did I know my interest rate; in my loan
- how did I find the total interest amount; in my loan?
so let’s take a deep look — with three examples. to find this: three questions. first of all let’s take a look at, personal loans; to find the monthly payment.
second we look at auto loans, to find the interest rate and total interest amount, if You are not: good at math. you may also use the normal calculator on your mobile . to find; the interest rate.
calculate the interest rate on personal loans
for example, if you buying a personal loan of $10000. you have an interest rate 2of 0% and your term loan is ; 3 years now you want to know how much to pay monthly.
step 1
first of all, to find the monthly payment— for your three-year loan you have to divide the 20% interest rate by wby100 if you ask, why do you want to divide with 100 which helps convert the percentage to a real interest number
step 2
if you divide 20 by 100 you will get the answer 0.2 then divide 0.2 by twelve if you ask — why I want to divide the 0.2 by 12 because you’ll want to know the real monthly interest
0.2 is a yearly interest. so if you divide 0.2 by 12. you will get the answer 0.0166666666666667 this is the real interest, you pay every month.
step 3
the final step is to find the: monthly payment. so now, multiply the 0.0166666666666667 by your initial loan amount of $10000 you will get the answer— for your monthly loan payment.
if you do the calculation, then your answer will be; 166.6666666666667. sSonow, you can follow the same step: to calculate any monthly payment. for your loan.
calculate interest rate: auto loan
now, let’s take a look at an auto loan. in this example: we are going to find the interest rate. for your auto loan. if you retake the Tanauto loan in the ank
step 1
your loan amount is 25000$ and you paid 4000$ for the initial down payment. so now , your loan amount is 21000$ .then , your bank provide monthly payment ; 697.50$.
first of all; divide the twenty-one thousand dollars by 36. you will get the initial amount without interest
which is 583.3333333333333$.
step 2
however, to calculate interest rates. just subtract the — initial monthly loan amount; without interest 583.3333333333333$ by 697.50$, of the bank monthly payment amount.
then you get the answer: 114.1666666666667 $. So you paying the 114.1666666666667$ interest on your auto loan; every month.
step 3
if you multiply the 144$ by 36 months. you will get the answer of; 4110.000000000001$. if you divide the 4110.000000000001$. by your total amount paid to the loan amount. you’ll get the answer is; 0.12.
moreover, if you don’t how decimals and percentages work. then check the below; the table below to understand the percentage. the table is only for understanding purposes, it’s not a formula.
calculate percentage
| monthly earning | percentage % |
|---|---|
| 1.62$ | 162% |
| 0.0234$ | 2.34% |
| 0.02$ | 2% |
| 0.1$ | 10% |
| 0.12$ | 12% |
| 0.2$ | 20% |
| 0.5$ | 50% |
| 0.832$ | 83.2% |
| 1$ | 100% |
calculate interest rate: total interest amount
so the final thing is; to find the total interest amount paid on the loan. in the above example — we find the interest rate. and monthly interest amount, on your loan every month. the monthly interest amount you paid on the loan is 114.1666666666667 $.
if you multiply by 36. you’ll get 4110.000000000001 $ total interest amount. so now, I think you will; understand clearly, how to calculate interest rates — manually.