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need help calculating to see what percentage loan I have

I have a 10% loan that is going to take 3 years to pay off. There is no annual percentage rate. Does that mean that the loan is more like 3.3% once it's paid off after 3 years?
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  • [Deleted User]
    [Deleted User] Posts: 35,383 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    What do you mean by 'a 10% loan'?

    Your paperwork will show your APR.
  • tacpot12
    tacpot12 Posts: 9,492 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    Sorry, you need to explain more about the loan as the details you have provided, and the question you have asked, don't make sense.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • dealer_wins
    dealer_wins Posts: 7,334 Forumite
    If the interest rate is 10%, then its 10%
  • Let's say it's a $10k loan at a 10% interest rate. The interest therefore is $1,000.

    If the interest is a one time fee (not annually - the loan is from a friend), and it takes 3 years to pay off the loan, is the friend truly making 10% on his money or is it less because of the length of time it takes to pay off the loan?
  • Caz3121
    Caz3121 Posts: 15,900 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    the equivalent would be 6.3% APR
  • helari wrote: »
    Let's say it's a $10k loan at a 10% interest rate. The interest therefore is $1,000.

    If the interest is a one time fee (not annually - the loan is from a friend), and it takes 3 years to pay off the loan, is the friend truly making 10% on his money or is it less because of the length of time it takes to pay off the loan?
    Interest rate tends to be quoted per year. Are you trying to ask what the APR is?

    It depends on the repayment schedule.
  • Could you please provide the formula you used to come up with the 6.3% calculation? I would like to be able to figure this out over the course of time in different scenarios. I also have a plan to provide a loan to someone and would like to know the realistic ROI, as a 10% interest loan is only 10% if the loan is paid off within a period of time. Thank you.
  • Interest rate tends to be quoted per year. Are you trying to ask what the APR is?

    It depends on the repayment schedule.

    The repayment schedule has fluctuated. The goal is to repay the loan without incurring additional interest annually, even though it will take more than a year to pay off. It is a loan from a friend so we are trying to negotiate something that will work for both of us and is fair at the same time. If a 10% loan was agreed upon up front, but the loan takes 3 years to pay off and therefore becomes a 6.3% interest loan, I want to have the proper calculations to determine what is a reasonable pay schedule.
  • Hi,


    if you've agreed to pay him 10% on $10,000, then you owe him $11,000, $366 a year or $305 a month, give or take a few cents.


    Borrowing or lending from/to a friend can be risky, many friendships have failed over money.
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