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.