If you need to know how to calculate the monthly interest on a loan, it is because you encounter some difficulties with the technicalities of financial institutions.
You go to a bank, and they start talking to you about TIN, APR, equivalent annual rate or commissions.
What you have as a client is that you want to pay as little as possible for financing. And we, at Prestalo, make it easy. We will tell you.
What Do I Need to Know to Calculate The Monthly Interest on A Loan?
In essence, there are several pieces of information that you will have to take into account when knowing how to calculate the monthly interest on a loan.
The two most important data are the following:
• – Nominal interest rate or TIN: it will indicate the interest percentage that the bank is going to ask you for on the money you ask for. The standard for banks is between 5 and 6.95%.
• – Annual equivalent rate or APR: this is the indicator that you like the most, because it is a very clear figure of how much the loan costs you, the interest itemized. Here the commissions, management expenses, amortization, opening, etc. are reflected.
For you to see with an example, if you ask for a loan of € 1,000 and they offer you the 5% TIN to be paid in 3 months, you would pay total interest of € 8.34. That means an APR of 5.11%.
If the bank told you that the total you pay is € 1,068.34 because it has an opening commission of € 60, no matter how much the TIN is 5% … it would have an APR of 52.74%! An illegal product that, in addition, you would not be interested in anything. That is why the conditions must always be read well.
What Is The Bank That Charges The Least Interest on Loans?
The truth is that this is something very changing, but currently, the best products are offered by Banco Sabadell, ING, and Bankinter.
As an example, these banks offer a TIN of 0 to 4.95%. As is logical, the trick to make the product profitable for the entities is the commissions.
What is the interest rate for a personal loan?
As with the offers of banks, generally loans with lower interest rates, the interest rate for a personal loan usually ranges between 3.99% and 4.95%.
This is an approximate percentage. It all depends on the level of risk, terms and guarantees that you can provide as a client.
How is the installment of a loan with formula calculated?
If you wonder how the installment of a loan is calculated with a formula, you can apply the income calculation system. In a more basic way, you can calculate the amount you will owe between the number of monthly payments: the difference will be the interests and commissions.
However, you may prefer to use an online loan simulator , which is a quick and efficient way to obtain the information.
Now that you know how to calculate the monthly interest on a loan, remember the key: always read the commissions and conditions!