How to Calculate Interest Rate for a Loan
Understanding Interest Rate Calculation
Interest rate is the amount charged by a lender to a borrower for the use of assets. It is typically expressed as a percentage of the principal amount borrowed. To calculate the interest rate on a loan, you can use the following formula:
Interest Rate = (Interest Amount / Principal Amount) x 100
Where:
- Interest Rate is the percentage rate charged on the loan.
- Interest Amount is the total amount of interest paid.
- Principal Amount is the original amount of the loan.