How do you calculate interest on a loan, i.e. 3% interest ?

Question

How do you calculate interest on a loan, i.e. 3% interest ?

Answer 1

Old  math  days,  3c on dollar,  3$  on the  hundred.

            so 100.00  with interest  is   130.00

Answer 2

You'd think there would be a single, decisive answer to this, wouldn't you? The concept is always the same: [loan amount] x [annual interest rate] = [annual interest expense]. For example: $5,000 x 3% = $150/year in interest.

Be aware, though, that lenders have all sorts of variations. There are different ways to determine what the loan amount is, how to translate annual interest charges into what you have pay each month, etc. If you are trying to understand a particular loan you have, ask the lender for a complete disclosure.

Good luck.

Answer 3

depends if simple or compounded

if simple and for a year on a $100 loan

100 x .03 = $3

compounded = you have to get the daily rate

3/365 and then multiply it each day

and you end up with an APR of 3.27 or some such nonsense

all the best