Content

• Steps
• Advice
• Warning
• What you need

If you know the amount of the loan and the amount of interest payable, you can get the maximum interest rate you can accept. You can also look at interest for a year to see what the annual percentage interest is. Calculating interest rates is easy, and also saves you a lot of money when making investment decisions.

Steps

Method 1 of 2: Calculate the interest rate

1. 

   Plug the numbers into the interest rate formula to get results. Knowing the quantities of this equation becomes easy. You only need to replace the numbers of the loan or savings account after you have paid / received interest. This simple equation can be used to find the base rate.
   • I is the amount of interest payable in the month / year / etc. there.
   • P is the principal amount (the amount before interest is calculated).
   • T is the period of time (week, month, year, etc.) involved.
   • R is the interest rate (decimal).

2. 

   
   
   Convert the interest rate to a percentage by multiplying by 100. A decimal like 0.34 doesn't make much sense when it comes to calculating interest. Multiply this value by 100 to get the percentage. This is the percentage of the principal amount expressed in interest. So if you had an interest rate of 0.34 then you would pay 34% interest ()

3. 

   
   
   Refer to your latest statement to fill in values ​​in your interest rate equation. You will easily find the interest payable, period of time (when the statement was made) and the principal amount. For example, let's say last year you paid 55 million dong of interest on a 280 million loan. You want to know what the monthly interest rate is. To find interest, do the following:
   • Equation for calculating interest rate:
   • Replace the number: Interest rate
   • Simplify the equation: Interest rate
   • Multiply this value by 100 to get the percentage:1.6% monthly interest.

4. 

   
   
   Make sure the time and interest rate is calculated on the same scale. Let's say you want to find the monthly interest on a loan after one year. If you replace "1" for T, ie for "a year," the final rate will be the annual interest rate. If you want to calculate your monthly interest rate, use the correct timeframe. In this case, you will use 12 months.
   • Time will be the period of time in which interest is payable. For example, if you are calculating monthly interest payments paid over a year, then you have already made 12 payments.
   • Remember to check with your bank when interest is charged - month, year, week, etc.

5. 

   Use online calculators to find interest rates on complex loans like mortgage. Interest on loans must be available when you apply for a loan or credit card. But confusing terms like APR (“annual percentage rate”) and fluctuating interest rates make it hard to understand how those interest rates are calculated. Interest rates are almost impossible to calculate by hand, but online calculator tools can help you find the specifics of a complex loan. Bankrate.com and CalculatorSoup are independent and trustworthy websites.
   • Search online with the phrase "Calculator + Interest rate + Loan type". For example, look for the "mortgage interest calculator", "deposit interest calculator" or "annual percentage rate calculator".
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Method 2 of 2: Understanding interest rates

1. 

   Talk to your bank lender to negotiate a lower interest rate. Loan interest rates are often the main issue for negotiating a loan. To be successful, you must be prepared before you negotiate. Before going to the bank or calling, you need to know how much money you want, how much interest you want to pay, and which interest rate is too high for you. Financially solid people with a 650+ credit rating have a better chance of successfully negotiating interest rates.
   • Call your credit card issuer and let them know you've found other banks offering better interest rates. If you are a regular customer paying on time, they may try to keep a business relationship with you.
   • Talk to your bank about the lowest interest rate they can offer. Explore the different banks so you have more options.
   • Beware of variable annual interest rates - it may look attractive at first, but these "deals" usually generate very high interest rates after 1-2 years.

2. 

   Choose a longer accrual rate to pay less interest. The accrual rate determines when interest is added to the principal. If the accumulation rate is too short (as daily), the unpaid interest at the end of the day will be added to the principal. That means next month's interest will be higher because of the larger principal amount. For example, consider how a $ 100,000 loan with 4% interest is accrued in three different ways:
   • Yearly: $110.412,17
   • Monthly: $110.512,24
   • Daily: $110.521,28

3. 

   Pay more than the interest whenever possible, regardless of the interest rate. Remember that interest is calculated as a percentage of the principal. Simply put - the more you owe, the more interest you will pay. If you can pay down the principal with interest each month, even though the interest rate remains the same, the interest payable will decrease.

4. 

   Keep track of common interest rates before taking out a loan. Interest can be seen as the cost of borrowing. Regardless of whether you pay interest, or the bank has to pay you for “borrowing” money in a savings account, you need to know the interest rate before signing anything.
   • Buy car: 4-7%
   • Buy house: 3-6%
   • Personal loans: 5-9%
   • Credit: 18-22%
   • Short-term loans: 350-500%.

5. 

   Know the interest of your investments to use your money wisely. The more secure an account, the less interest you will earn, such as savings accounts, certificates of deposit, and bonds. That said, secure accounts with slow growth can be useful for retirement savings purposes. Other accounts with higher interest rates will bring more money, but the risk associated with them will be higher.
   • Saving account: 1-2%
   • Certificates of deposit 1-2%
   • US bonds (over 30 years): 3-4%
   • 401k & IRA: 6-10%
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Advice

• Always find out and know your interest rates before signing papers. You need to know how much interest you must pay before you enter into an agreement.

Warning

• Always double-check calculations for important numbers. If in doubt, use an online computer or talk to a banker.

What you need

• Pencil
• Paper
• Laptop
• Bank / Loan