How to calculate interest on a short-term loan

How to calculate interest on a short-term loan

Step 1:

Ask your lender about interest rates and interest rates charged for your loan. You need to know the original amount (or amount) of the loan, the interest rate and if the interest is calculated for you simple or compound.

Step 2:
Multiply the interest rate (convert the decimal number by dividing the percentage for 100) of the balance of the principal owed by the time of unit per year. Then, divide that number for 100 to find the amount of interest calculated during that period. For example, if you borrow 10,000 dollars with an interest of 6 percent in 1 year, you will be charged 600 dollars in a simple way.

Step 3:
Calculating compounding by using this formula: P (1 + (r/100) ^ n (P) with 1 plus interest rates (shown by decimal) and that the number is worth "n " (n represents the number of years of a loan). For example, $10.000 loans with a 6 percent interest in 1 year will be priced $612.64 if interest is calculated quarterly interest.

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