How to Figure Interest?

Answer

There are different ways in which banks use to calculate interest. To calculate interest for one year you take the principal which is the total amount of money borrowed you multiply it with the rate of loan repayment percentage and then with one year. If it is less than one year, you divide the number by twelve to convert it in yearly form. The formula is Interest/Principal X Days in the Year (360)/Days Loan is Outstanding.
2 Additional Answers
Interest is what you pay your lender for the cost of using credit. Most lenders will the average daily balance as the deciding factor for your interest rate. The formula is the average daily balance x daily periodic rate x days in cycle = monthly finance charge For more information look here: www.careonecredit.com;
To calculate interest you need a simple formula. It is I = PRT. PRT is your principal, rate and time. Plug in the numbers and you are calculating interest.
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