How to Calculate Interest On a Loan

This article tells you how to calculate the interest APR rate on a loan.

Instructions

1. Take a $10,000 loan from your banking institution for 1 year and assume you have to pay $100 interest for one year, with a stated interest rate of 5%.

2. Calculate the effective loan rate = Interest divided by Principal or $100/$10,000 = 5%

   Your APR annual percentage rate is equal to the previous stated rate.

3. Currently personal lines of credit loans and home mortgage loans will range from the low 5% to the high 12-15% interest. Typically lines of credit will require a co-signer and home loans often need at least 10-20% down to make the deal work.

4. Right now is a tough time to get a loan at a bank but if you have collateral such as other properties to leverage or a car that is newer than 10 years you can use them to borrow more money. Life insurance, stocks, bonds, and other investments are also subject to be used as collateral.

Resources

• How to Make Money Blogging