Calculating the interest rate per annum isn't that difficult if you know three things: the principal amount; the interest rate; and the time period in years. Knowing the equation for figuring per-annum interest will help you know what the interest rate will be on a loan of any size before you sign on the dotted line.
Multiply the principal by the rate of interest. For example, using £5,525 as the amount of principal and .0325 as the rate of interest, the calculator will display 276.25.
Multiply that figure by the time. In this example, use two years. The calculator will display 552.50. This is the total interest that will be charged on the loan.
To figure the monthly interest, divide £359.1 by 24 months.
Remember the equation P x R x T (principal times rate times time).
Tips and warnings
- Remember the equation P x R x T (principal times rate times time).