Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • helari
    • By helari 12th Jan 19, 3:49 PM
    • 4Posts
    • 0Thanks
    helari
    need help calculating to see what percentage loan I have
    • #1
    • 12th Jan 19, 3:49 PM
    need help calculating to see what percentage loan I have 12th Jan 19 at 3:49 PM
    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?
Page 1
    • zx81
    • By zx81 12th Jan 19, 3:56 PM
    • 20,131 Posts
    • 21,478 Thanks
    zx81
    • #2
    • 12th Jan 19, 3:56 PM
    • #2
    • 12th Jan 19, 3:56 PM
    What do you mean by 'a 10% loan'?

    Your paperwork will show your APR.
    • tacpot12
    • By tacpot12 12th Jan 19, 4:40 PM
    • 1,829 Posts
    • 1,568 Thanks
    tacpot12
    • #3
    • 12th Jan 19, 4:40 PM
    • #3
    • 12th Jan 19, 4:40 PM
    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 check official information sources before relying on my posts.
    • dealer wins
    • By dealer wins 12th Jan 19, 7:15 PM
    • 6,202 Posts
    • 12,227 Thanks
    dealer wins
    • #4
    • 12th Jan 19, 7:15 PM
    • #4
    • 12th Jan 19, 7:15 PM
    If the interest rate is 10%, then its 10%
    Choose life
    • helari
    • By helari 12th Jan 19, 8:37 PM
    • 4 Posts
    • 0 Thanks
    helari
    • #5
    • 12th Jan 19, 8:37 PM
    • #5
    • 12th Jan 19, 8:37 PM
    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
    • By Caz3121 12th Jan 19, 8:54 PM
    • 11,658 Posts
    • 7,608 Thanks
    Caz3121
    • #6
    • 12th Jan 19, 8:54 PM
    • #6
    • 12th Jan 19, 8:54 PM
    the equivalent would be 6.3% APR
    • A Nice Englishman
    • By A Nice Englishman 12th Jan 19, 9:08 PM
    • 2,155 Posts
    • 1,233 Thanks
    A Nice Englishman
    • #7
    • 12th Jan 19, 9:08 PM
    • #7
    • 12th Jan 19, 9:08 PM
    Assuming the loan is paid off in 36 equal monthly payments of 305.58 then the APR would indeed be 6.3%

    https://www.calculatestuff.com/financial/apr-calculator?principal=10000.00&interest_rate=6.300& term=3&added_fees=0.00&prepaid_fees=0.00&term_in_y ears=1&calculation_type=US#results
    • John G Jones
    • By John G Jones 12th Jan 19, 9:41 PM
    • 98 Posts
    • 159 Thanks
    John G Jones
    • #8
    • 12th Jan 19, 9:41 PM
    • #8
    • 12th Jan 19, 9:41 PM
    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?
    Originally posted by helari
    Interest rate tends to be quoted per year. Are you trying to ask what the APR is?

    It depends on the repayment schedule.
    • helari
    • By helari 13th Jan 19, 6:39 AM
    • 4 Posts
    • 0 Thanks
    helari
    • #9
    • 13th Jan 19, 6:39 AM
    • #9
    • 13th Jan 19, 6:39 AM
    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.
    • helari
    • By helari 13th Jan 19, 6:45 AM
    • 4 Posts
    • 0 Thanks
    helari
    Interest rate tends to be quoted per year. Are you trying to ask what the APR is?

    It depends on the repayment schedule.
    Originally posted by John G Jones
    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.
    • frugalmacdugal
    • By frugalmacdugal 13th Jan 19, 7:09 AM
    • 6,404 Posts
    • 5,502 Thanks
    frugalmacdugal
    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.
    Y'all take care now.
    • Tarambor
    • By Tarambor 13th Jan 19, 1:46 PM
    • 4,253 Posts
    • 3,260 Thanks
    Tarambor
    I want to have the proper calculations to determine what is a reasonable pay schedule.
    Originally posted by helari
    The borrower isn't the one who gets to demand that. The lender sets the terms and the overall amount to be repaid, the borrower decides whether they're acceptable or not.

    The formula for calculating compound interest is as follows:

    A = PMT (((1 + r/n)^(nt) - 1) (r/n))
    A = the future value of the investment, including interest
    PMT = the payment amount per period
    r = the annual interest rate (decimal)
    n = the number of compounds per period
    t = the number of periods the money is invested for
    ^ means 'to the power of'

    And you just use algebra to rearrange that formula to find whatever value above you're looking for such as the payment then for example.
    A / (((1 + r/n)^(nt) - 1) (r/n))=PMT.

    Now there is a way that is much easier. Two choices:

    1) If you're using EXCEL you can use the RATE function. More here:
    https://exceljet.net/formula/calculate-interest-rate-for-loan

    Alternatively, use the compound interest calculator on to this website,

    https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

    Select the standard calculator. Put in the amount you're borrowing as the principle sum, enter the interest rate they get on their money for their savings account or wherever they're drawing it from, how many years you'd like to repay it over and set the compound rate to monthly. It'll then show you what the overall amount you'd need to repay your friend over the period you intend to repay will be and at the bottom of the table what the effective annual rate of interest is. You then take that amount final amount, divide it by the number of months (1yr=12, 2yr=24, 3yr=36 etc) and that'll give you your monthly payment.
    Last edited by Tarambor; 13-01-2019 at 2:00 PM.
    • John G Jones
    • By John G Jones 13th Jan 19, 5:00 PM
    • 98 Posts
    • 159 Thanks
    John G Jones
    The concept of APR doesn’t mean anything without a defined repayment schedule, so the whole question is flawed.

    Edited to add, that’s not quite right; it’s meaningless once you’ve defined the repayment amount, it’d be perfectly possible to agree a 10% APR with no schedule but the total to be repaid would then depend on when payments were made.
    • foxy-stoat
    • By foxy-stoat 14th Jan 19, 11:50 AM
    • 3,397 Posts
    • 1,909 Thanks
    foxy-stoat
    I also have a plan to provide a loan to someone
    Originally posted by helari
    Based on this alone you probably wont get your return back so the interest you charge will be irrelevant.
    • frugalmacdugal
    • By frugalmacdugal 14th Jan 19, 3:16 PM
    • 6,404 Posts
    • 5,502 Thanks
    frugalmacdugal
    Hi,



    I have a 10% loan that is going to take 3 years to pay off.
    Originally posted by helari
    I also have a plan to provide a loan to someone .
    Originally posted by helari

    Ah, so you are going to borrow money, then resell at a higher interest rate?


    Risky.
    Y'all take care now.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

231Posts Today

1,603Users online

Martin's Twitter
  • As normal I am signing off twitter for the weekend - to spend time with mini and Mrs MSE. Hope you have a wonderfu? https://t.co/FG3sRfkIgA

  • RT @LauraFrancis9: Top crew! We may film in the freeeeeeeezing cold every week, but this bunch make it fun. (And huge thanks as always to @?

  • Turns out this is all Google served. We've been in touch and it's shutting it down which should cut it on many webs? https://t.co/8OYeMjEu4n

  • Follow Martin