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Is it important to get a low interest rate when you borrow money like on a credit card or student loan?
It depends on whether the interest rate is a low introductory rate or a fixed rate. It also depends on how fast you plan to pay it off. The faster you pay it off, the less significant the rate of interest is.
How do you calculate how much interest you will pay for a loan?
The calculation is truly dependent on the type of loan, the compounding period and the duration of the loan. Basic (simple) interest is calculated as follows: I = P * r * t where: I = interest owed P = principal balance (original amount borrowed) r = annual interest rate t = loan duration in years So, say you are borrowing $10,000 for one year at 12% interest. Plugging in the numbers: P = 10,000; r = 12% = 0.12; t = 1 I = 10,000 * 0.12 * 1 = 1,200 So, the simple interest for a year is $1,200. The above steps indicate the process of calculating the interest. But if you wish to decide about the rate of interest you are ready to pay for the loan, it is dependant upon the cash flow that will occur during the same period by which you pay interest. Please remember cash flow is different from profit. However if you pay a major portion of your profit ( income ) towards interest, then it implies that your are working for the lender than for yourself.
How are interest rates calculated?
Calculating Interest: Principal, Rate and Time are Known--I= p r t http://www.calculator.net/interest-rate-calculator.html The level of interest rates in a free market economy are primarily determined by the rate of inflation, the demand for money, and the actions of the Federal Reserve. Lenders of money will generally demand what is known as a nominal interest rate which is equal to a real interest rate plus a premium to cover the inflation rate. The real, or inflation adjusted interest rate, is the percentage rate of return to a lender as measured by an increase in purchasing power. Yale professor Irving Fisher's economic theory of interest rates laid the conceptual groundwork for establishing that the nominal interest rate equals the real interest rate plus the anticipated rate of inflation. Fisher's mathematical equations in his theory of interest rates are supported by empirical data. A comparison of comparable maturity U.S. Treasury securities, one of which has a fixed rate and the other an inflation adjusted rate, shows that the nominal interest rate always exceeds the real interest rate. A consumer, whether a borrower or a saver, will generally be quoted a nominal interest rate by a bank on a loan or a savings account.
The annual interest rate for a loan is 14 percent how much interest is due on a loan of 720.000 in one year?
Simple interest of $100.80 is due when borrowing the $720.00 for a year. The following formula provides the calculation necessary: SimpleInterest = Principal * AnnualInterestRate So, for the above question: SimpleInterest = $720.00 * 14% = $720.00 * 0.14 = $100.80
A man has a loan which he promised to pay in 18 equal monthly installments of P600. What are monthly installments for 8 months 10 months 12 months and 15 months?
The question can be answered only for the loan with zero interest. The loan is then 10,800 (18 x 600) that could also be paid by 1350 a month for 8 months 1080 a month for 10 months 900 a month for 12 months 720 a month for 15 months In the case the loan is not interest free the problem cannot be solved, since there are two unknown variables: a principal amount (an amount borrowed) and an annual interest rate and only one equation. For instance if you borrow 10,000 with 10% annual interest rate, the loan will be paid off in 18 monthly installments of 600, which corresponds to the question. For the same principal (10,000) and annual interest rate (10%) the loan would have been paid off in: 8 month installments of 1297; 10 month installments of 1046; 12 month installments of 879; 15 month installments of 712. But you can still have the loan with other pairs of principal and interest rate with 18 monthly installments of 600. There is a suitable Excel formula PMT too. Monthly installments can be calculated by formula: Monthly installment = Principal x {rate + (rate / [(1+rate)months - 1]} where rate = (annual rate / 12), i.e. 10% => 0,1/12
Where can one calculate interest of a loan?
The interest of a loan can be calculated by using the 'Loan Calculator' facility at the Bankrate website. One would need to know details, such as the interest rate and the loan term.
What is Islamic loan?
It is the one that has no interest (0 interest rate)
What is an example of an inexpensive loan and a medium price loan and a expensive loan?
An inexpensive loan is one with a 0.12 percent interest rate. A medium price loan would be about a 6.5 percent interest rate. Lastly, an expensive loan would be one with an interest rate of 15 percent or more.
Where can one calculate the true cost of a loan?
There are many places which will allow you to calculate how much a loan will cost you. Most of the time, the loan provider will give you documentation with how much the actual loan will cost you considering the loan's interest rate and the monthly payments you have chosen.
Where can one get the best loan interest rate in the US?
One can get the best loan interest rate in the US by researching and bargaining with financial institutions. One can compare loan interest rates online through broker and banking sites such as ConsumerReports and YahooFinance. One can also call or visit private banks and lending brokers to negotiate the best loan interest rate.
How does one find the lowest loan interest rate for a home loan?
To find a low interest rate for a home loan, one should shop around at multiple financial institutions. Having a good paying job and great credit will help decrease your interest rate. If you find an interest rate that you think is low, be ready to sign the loan. Consider locking in that rate, unless you STRONGLY believe that the rate will drop in the near future.
Where can one find their personal loan interest rate?
One can find what their current interest rate is by talking to the financial institution with which one got the loan. Many of these institutions offer online services where one can find their loan information as well.
What is a prescribed loan?
The prescribed interest rate is set every quarter based on the federal interest rate. A prescribed loan would be the one that would carry the prescribed federal interest rate. The person applying for the loan could have the attribution rules waived.
What is the average interest rate on same day payday loans?
The average interest rate on a same day payday loan can be over 900 % for a one week loan, over 400 % for a two week loan and 200 % for a one month loan.
How can one calculate auto loan?
There are many ways one can calculate their auto loan. One can calculate auto loans by visiting popular on the web sources such as Capital One and Bank Rate.
Where can one get a low interest rate on a loan for an automobile?
There are many places one could get a low interest rate loan for an automobile including the Tesco website. Alternatively you could use the Sainsburysbank website. How low your low interest rate would depend on your credit history.
What advantages do ARM loans have over regular mortgages?
One of the main benefits an ARM loan has over a regular mortgage is the interest rate. Should the interest rate drop, one with an ARM loan has an advantage of a lower interest rate without having to refinance. Monthly payments will be lower as well with an ARM loan due to fluctuating interest rates.
