How to Determine the Interest Rate on a Loan
- 1). Divide the interest charged by the account balance to find the periodic interest rate expressed as a decimal. You can find this information by contacting your lender or consulting your loan statement. For example, if you paid $300 of interest in a monthly payment on a $36,000 loan, you would divide $300 by $36,000 to find the monthly interest rate equals 0.0083333.
- 2). Multiply the periodic interest rate by the number of periods per year to find the annual interest rate expressed as a decimal. In this example, because there are 12 payments per year, you would multiply 0.00833333 by 12 to get 0.1.
- 3). Multiply the annual interest rate expressed as a decimal by 100 to calculate the annual interest rate. Finishing this example, you would multiply 0.1 by 100 to find the annual interest rate to be 10 percent.
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