How to calculate interest on a loan: formula. Calculation of interest on a loan: an example

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Everyone faced the problem of lack of money to purchase household appliances or furniture. Many have to borrow until payday. Some prefer not to go to friends or relatives with their financial problems, but immediately contact the bank. Moreover, a huge number of credit programs are offered that allow you to solve the issue of buying expensive goods on favorable terms.

What is a loan?

This system of economic relations provides for the transfer of values from one owner to another for temporary use on special terms. In the case of banks, this value is money. A person needs a certain amount, an economist evaluates the client's solvency and makes a decision. If everything is in order, the necessary funds are provided for a certain period. For this, the client pays interest to the bank.

NotDo you have enough money to buy goods or do you need cash? It's worth getting a loan. A low percentage always attracts customers. Therefore, popular financial institutions provide credit cards and cash loans on favorable terms. And the formula (calculation of interest on a loan) will help you figure out how much the bank will have to pay for the service.

Overpayment

In the case of a bank loan, the commodity is money. For the provision of services, the client must pay a fee to the financial institution. To understand how the overpayment amount is calculated, it is worth understanding the following concepts:

• loan body;
• commission;
• annual interest rate.

The repayment system matters, as well as the loan term. This will be discussed below.

What is the loan body?

The amount that a person borrowed from a bank is the body of the loan. As payments are made, this amount decreases. It is on the body of the loan that interest is charged and, in most cases, commissions.

Let's consider an example. The client executed a loan agreement on May 1 in the amount of 20,000 rubles. A month later, he made the minimum payment of 2,000 rubles. Of this amount, 500 rubles were spent on paying interest on the loan, and 1,500 rubles were spent on paying off the body. Thus, as of June 1, the body of the loan decreased to 18,500 rubles. In the future, all interest will be charged on this amount.

Commission

The percentage that the client paysbank in excess of the interest rate, this is the commission. Different financial institutions may offer different loan terms. The commission can be charged both on the body of the loan and on the amount that the client initially borrowed. Recently, many banks refuse commission altogether and set only an annual interest rate.

Consider the example with a fixed fee of 0.5%. The client took a loan in the amount of 10,000 rubles. The monthly commission will be 50 rubles. The formula (calculation of interest on a loan) looks like this: 10,000: 100 X 0.5.

If the commission is not fixed, it is charged on the balance of the debt (loan body). This option is more beneficial for the client, since the amount of interest is constantly decreasing. As a rule, the commission is charged on the balance of the debt as of the last business day of the month. That is, if the client paid the entire amount on the 28th, and the last business day falls on the 30th, you will not have to pay a commission.

Annual interest rate

If there is no commission under the loan agreement, the annual rate will be the basis for calculating the overpayment. Interest is always charged on the balance of the debt. The faster the client repays the loan, the less he will have to overpay.

How much interest does the loan provide? Different banks offer their own conditions. It is possible to borrow money at a rate of 12% to 25%. Next, it will be described how the calculation of interest on the loan (formula) is carried out. Example: a client took out a loan in the amount of 10,000 rubles. Annu althe contractual rate is 15%. On the day, the client will overpay 0.041% (15:365). Thus, in the first month you will have to pay the amount of interest in the amount of 123 rubles.

10,000: 100 x 0, 041=4 rubles 10 kopecks - the amount of the overpayment per day.

4, 1 x 30=123 rubles/month (assuming there are 30 days in a month).

Consider further. The client made the first payment in the amount of 500 rubles. There is no contract fee. 123 rubles will go to interest, 377 rubles - repayment of the body. The balance of the debt will be 9623 rubles (10,000 - 377). This is the body of the loan, on which interest will be charged in the future.

How to quickly calculate the overpayment on a loan?

It is difficult for a person who is far from the financial sector to make any calculations. Many banks offer a loan calculator for customers, which allows you to quickly calculate the overpayment under the contract. All you need to do is enter the amount of debt, the estimated repayment period and the annual interest rate on the institution's website. In a few seconds, you will be able to find out the amount of the overpayment.

The loan calculator is an auxiliary tool that allows you to roughly calculate the amount of the expected overpayment. The data is not accurate. The amount of the overpayment depends on the amount of funds that the client will contribute, as well as on the repayment period of the loan.

What are the loan repayment systems?

There are two options for repaying a loan. Classic provides for the payment of a certain part of the body of the loan and the interest rate. Example: the client decidedtake a loan for a year in the amount of 5000 rubles. Under the terms, the annual rate is 15%. Monthly, you will have to pay the body of the loan in the amount of 417 rubles (5000: 12). The formula (calculation of interest on a loan) will look like this:

5000: 100 x 0.041=2 rubles 05 kopecks - the amount of the overpayment per day.

2, 05 x 30=61 rubles 50 kopecks (provided that there are 30 days in a month) - the amount of the overpayment per month.

417 + 61, 5=478 rubles 50 kopecks - the amount of the mandatory minimum payment.

With the classic repayment system, the amount of payments decreases every month, since interest is charged on the balance of the debt.

The annuity system provides for loan payments in equal installments. Initially, a fixed amount of the minimum payment is set. As the debt is paid off, most of the money goes to repay the loan body, as the overpayment of interest decreases.

Let's consider an example. The client decided to take a loan for 10 years in the amount of 100,000 rubles. The annual rate is 12%. Overpayment per day 0.033% (12:365). The formula (calculation of interest on a loan) will look like this:

100,000: 100 x 0, 033=33 rubles - the amount of the overpayment per day.

33 x 30=990 rubles - the amount of the overpayment per month.

The minimum payment can be set at 2000 rubles. At the same time, 1,100 rubles will go to repay the body of the loan in the first month, then this amount will decrease.

Pen alties

If a bank client defaults on its debt obligations, the financial institution has the rightcharge a fine. The conditions must be described in the contract. The fine can be presented as a fixed amount or in the form of an interest rate. If, according to the contract, pen alties are provided in the amount of 100 rubles, for example, it will not be difficult to calculate the amount of the next minimum payment. You just need to add 100 rubles.

Things are more complicated if pen alties are charged in the form of an interest rate. As a rule, the calculation is based on the amount of debt for a certain period. For example, a client had to make a minimum payment of 500 rubles by May 5, but did not do so. According to the agreement, the pen alty is 5% of the amount owed. The next payment will be calculated as follows:

500: 100 x 5=25 rubles - the amount of the fine.

Before June 5, the client will need to deposit 1,025 rubles (two minimum payments of 500 rubles and a fine of 25 rubles).

Summarize

It is easy to calculate the interest on a loan on your own. One has only to carefully study the terms of the contract and use the formulas described above. Facilitate the task of special loan calculators, which are presented on the official websites of financial institutions. It is worth remembering that only an approximate calculation is made. The exact amount may depend on many factors, such as the loan term, repayment amounts, etc. The shorter the loan term, the lower the overpayment.