How to Figure Interest on a Loan Lender

If you are thinking about taking out a loan for a car or house, or any major purchase, first calculate the interest. Follow the steps in the following example.

Things You'll Need

• Calculator

Instructions

1. Take the amount you want to borrow, the principle, and multiply it by the interest rate, and then multiply that by the the number of years in the loan. Let's say you want to borrow $10,000, and your interest rate is .10 over a five-year loan. $10,000 x .10 x 5 = $5,000. This is your interest.

2. The total amount you will have to repay is $15,000.

3. Multiply the number of years in the loan, five, by the number of months in a year, 12. 5 x 12 = 60. This tells you the number of payments you will make. Divide the total arrived at in step 2 by this number. $15,000/60 = $250. This is your monthly payment.