How to Figure an Interest Rate Payment
Figuring an interest rate payment can be accomplished if you know the interest rate and loan amount being calculated. For the monthly amount, it is a two-step process: find the yearly amount, then find the monthly amount. You can find the daily amount as well.
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Things You'll Need
- Calculator
- Pen and paper
- Knowledge of loan amount
- Knowledge of interest rate
Instructions
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Figuring An Interest Rate Payment
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1
Contact your bank to be sure you have the correct interest rate and loan amount.
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2
Multiply the amount of the loan (for example, $200,000) by the interest rate (6%). In this case, $200,000 X 6%, or 0.06, equals $12,000. This gives you a year's total of interest that will be paid on the loan.
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3
Take the year's total ($12,000) and divide by 12 to get the monthly amount to be paid. $12,000 divided by 12 = $1000.00 per month.
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4
Compute the daily interest by using the monthly amount of interest ($1000.00) and divide by 30 days. This will give you the daily interest of $33.33. You could also use $12,000 divided by 360 days for daily interest. The daily interest is still $33.33.
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1
Tips & Warnings
Paying additional funds against the principal balance will reduce the amount of monthly (or daily) interest. For example, a $200,000 loan was reduced to $195,000 when the borrower applied a principal-only payment against the balance. $195,000 X 6% = $11,700 in interest due per year; divide by 12 to get a monthly amount of $975.00 per month.
Not paying any additional funds against your principal balance will result in no reduction in principal balance, and no equity built up (if the loan is a mortgage on a home).
