Instruction

1

To find out the cost of servicing the loan portfolio, calculate the weighted average interest rate for all loans. Calculate the total amount of expenses for payment of percent for the year by multiplying the loan amount by the interest rate on each contract separately and adding the values. Divide the final value on the index credit volume of the company and multiply the quotient by 100.

2

To calculate the weighted average interest rates on loans and deposits use the formula proposed by the Central Bank of the Russian Federation:

Pav = (V1 x P1 + V2 x P2 + ... + Pn x Vn):(V1 + V2 + ... + Vn), where

V1, V2, ..., Vn – the volume of loans or deposits,

P1, P2, ..., PN is the nominal interest rate under the contract.

Pav = (V1 x P1 + V2 x P2 + ... + Pn x Vn):(V1 + V2 + ... + Vn), where

V1, V2, ..., Vn – the volume of loans or deposits,

P1, P2, ..., PN is the nominal interest rate under the contract.

3

For the loans in different banks, and you have a large number of contracts for convenience, make calculations using the spreadsheet: in column A enter the loan amount, in column b – interest rate in the column, specify the formula for calculating the amount of annual interest (A x B), and in the lower part of the table or the formula to calculate totals for columns. In a separate cell, select the algorithm of calculating weighted average rates:

(Total column C / Total of column A) x 100.

(Total column C / Total of column A) x 100.

4

If you do not know the interest rate in terms of contracts, but there is the total amount of expenses for payment of percent on credits, divide it by the total volume of credit mass and multiply by 100 - you will receive the average rate.

5

In addition, loan and Deposit transactions may be issued on terms of variable interest rates. In this case, its mean value is need to calculate taking into account the change of its value during the entire period of the contract. To do this, multiply the loan amount by the interest rate, divide by the number of days in the year (365 or 366), and multiply by the number of days in which it was applied. Calculate and add the interest charges for each rate, and then divide the total amount by the loan amount and multiply the result by 100.

# Advice 2: How to find interest rate

In our time man is very far from accounting and Finance constantly face with interest. When applying for a loan and deposits at the Bank, while getting wages and all kinds of discounts. In such cases, simply indicate the interest rate. To count as a specific amount, usually falls to the person.

You will need

- Calculator.

Instruction

1

To find the simple interest

With the amount

To% - the amount of interest.

**rate**from a certain amount, multiply the amount of interest on a certain amount and divide by one hundred. As a formula, this rule can be written as follows:PS = C * K% / 100 where:PS – the interest rateWith the amount

To% - the amount of interest.

2

Example.

Employee when applying for a job promised salary: 30000 rubles per month. What amount worker will receive at the end of the month?Solution.

The company is obliged to withhold from the wages of his employee's income tax, the interest rate is 13%. That is, in this case:

30000 * 13 / 100 = 3900 (rubles). Accordingly, the cashier the employee will receive:

30000 – 3900 = 26100 rubles. (In practice this amount might be slightly longer, as usually applied tax deductions, i.e. income tax will be charged on the whole amount).

Employee when applying for a job promised salary: 30000 rubles per month. What amount worker will receive at the end of the month?Solution.

The company is obliged to withhold from the wages of his employee's income tax, the interest rate is 13%. That is, in this case:

30000 * 13 / 100 = 3900 (rubles). Accordingly, the cashier the employee will receive:

30000 – 3900 = 26100 rubles. (In practice this amount might be slightly longer, as usually applied tax deductions, i.e. income tax will be charged on the whole amount).

3

To determine the inverse of the interest

– Amount (with interest),

To% - the amount of interest (already accrued).

**rate**, subtract from the sum (with interest) the same amount, divided into one hundred plus the number of interest and multiplied by a hundred. To avoid mistakes when calculating reverse percentages, use a calculator and the following formula:CV = C – C / (100+K%) * 100 where:Ops – back interest rate– Amount (with interest),

To% - the amount of interest (already accrued).

4

When calculating the interest rate, be sure to note what data (amount, quantity, weight) given to "clean" or with accrued interest. Example.

On the packaging of mayonnaise says: "+50% free". Mayonnaise is 60 rubles.

Question: what is the amount of mayonnaise added to the package.Solution.

At first glance, the solution is obvious: 50% of 60 rubles – 30 rubles. Usually the "solution" and expect manufacturers. But actually:Ops = 60 – 60/(100+50)*100 = 20 (rubles).As can be seen, the error is 10 rubles, or 50%. Moreover, the manufacturer has specified everything correctly: he put mayonnaise on 40 rubles, and then decided to add (+) mayonnaise in the amount of (20 rubles), representing 50% of this amount (40 RUB.).

On the packaging of mayonnaise says: "+50% free". Mayonnaise is 60 rubles.

Question: what is the amount of mayonnaise added to the package.Solution.

At first glance, the solution is obvious: 50% of 60 rubles – 30 rubles. Usually the "solution" and expect manufacturers. But actually:Ops = 60 – 60/(100+50)*100 = 20 (rubles).As can be seen, the error is 10 rubles, or 50%. Moreover, the manufacturer has specified everything correctly: he put mayonnaise on 40 rubles, and then decided to add (+) mayonnaise in the amount of (20 rubles), representing 50% of this amount (40 RUB.).

# Advice 3: How to determine interest rate on loan

The main issue of concern to the borrower is how much he will eventually have to pay the Bank for using its funds. The declared interest to the uninitiated often do not reflect the real picture. Effective interest rate (EPS) can exceed the stated 2-3 times.

Instruction

1

The formula for calculating EPS suggested the Central Bank regulation No. 254-P as amended on 1.07.2007 G. Despite the complexity of the above calculations, the users of the computer, particularly Microsoft office, is a great advantage. Excel financial functions is the formula for calculating the net internal rate of return. In the English version it's XIRR, in Russian – "chistendom".

2

In the letter No. 175-T, dated 26 December 2006, the Central Bank clarifies how to calculate the examples. The effective interest

**rate**on**the loan**can be calculated only on the basis of specific data. This is the sum of the initial contribution, the date of issuance of the loan, its term, payment frequency and basis of their calculation.3

Example 1. The terms of loans as follows:- ∑ the loan – 12 660 rubles;- payment type – annuitant; - interest rate – 29%; - the maintenance fee is 1.9% of the loan amount per month;- loan term – 12 months;- the date the loan – 17.04.2012.

4

*The effective interest calculation you can maintain after the Bank will provide a table of repayment of the loan. It create in Excel a table similar to that depicted in Table 1. According to the logic of the common man, the overpayment will be 4959,16 rubles, and this is only 39,17% per annum. However, the effective interest rate will be about 90%. To obtain this figure, in cell F19 following the procedure below: "Insert" - "Function" - "Financial" - "chistendom". The argument "Value" select entire column "Amount of payment" in addition to "total" in the argument "Date" is the entire column "Date of payment". The argument "Predp" (estimated return of investment) can be omitted. So, the effective interest rate in this case will be 89,78% per annum.*

5

*Example 2. The source data is the same, but the Bank will charge a lump sum Commission in the amount of 1.9 percent per year. Accordingly, the repayment of the loan will have a somewhat different (see Table 2) 12660 x 1.9% x 12 = 2886 roubles. This amount will display in the column amount of payment: to the original -12660 add 2886. Get -9774. You will immediately see that EPS will increase to almost 124%!*

6

*Example 3. The Bank offers the loan without a fee for maintaining the loan account. It would seem that in this case the stated rate should be effective. But everything is not so simple. Instead of the declared 29% APR you get of 33.1%. The Bank cheated you? Not at all. Function "chistendom" default puts the expected yield of 10% per annum. It turns out that the Bank receives a monthly payment amount, taking into account its reinvestment. And let the simple inhabitant is difficult to understand why in the end he will pay more than stated, the Bank's actions legitimate.*

Note

Before signing the agreement, the Bank shall not be obligated to furnish to its borrower size EPS. For this reason, to compare loan offers of different banks is very problematic.

Useful advice

The fees for maintaining the loan account could be found illegal in court.

# Advice 4: What is the interest rate and annual percentage

Interest rate - the rate in percentage terms that indicates the amount of the loan paid by the borrower for the use of money or the investor will receive on Bank deposits.

## Types of interest rates

There are several types of interest rates. Depending on the period, you can allocate the annual interest rate, monthly, quarterly. Most often refers to the rate for the year, or percent per annum. Other indicators are used rarely, most often in order to conceal the real annual interest rate on the loan.

Depending on the properties of the interest rate to change over time distinguish between fixed and floating rates. Fixed rate prescribed in the contract, it is stable and does not change under the influence of any external factors. It can not review none of the parties.

Unlike its counterpart, the floating rate may be revised periodically based on the fluctuations of any indicators. For example, some banks increase rate on deposits when reaching the account a certain amount. Another example - metal deposits. In this case, the money is invested in precious metals, and the yield on the Deposit depends on changes in their prices in world markets.

Depending on the time of payment of interest on the loan distinguish decursive and anticipative bet. Last paid at the time of issuance of the loan, i.e. the borrower is advanced, in practice almost never occurs.

There are also nominal and the real interest rate. The real interest rate in contrast to nominal does not include inflation.

From the perspective of the banking market participants distinguish between the accounting rate (refinancing rate), interest rates (lending and Deposit rates) and interbank interest rate.

The refinancing rate is the most important economic indicator that reflects the percentage by which the Central Bank lends to banks. With its help, the Central Bank regulates the volume of the money supply, inflation, balance of payments, the exchange rate in the country.

Interest rates – the most common in the form of loan interest. The credit percentage is formed on the basis of the basic rate premium for the risk of default and debt payment for the credit rating.

The Deposit rate is always lower than the credit of a few percentage points. The difference between them is called "interest margin", it generates Bank profits.

Interbank interest rate operates on the interbank lending market. They are quite volatile and dependent on market conditions.

## Interest rates in Russia

The refinancing rate of the Central Bank of the Russian Federation in Russia is 8.25%. It depend on rates of banks on credits and deposits. Banks typically raise deposits at a rate slightly below the rate of refinancing, and loans at interest in excess of it.

In 2013, the average interest rate on deposits has declined steadily. According to the Central Bank of the Russian Federation, in December 2013 it amounted to 6.2% per annum (for a period of one year, excluding rate demand), a decrease of almost 1% YTD.

The average annual interest rate on loans is much higher. At the end of 2013 it amounted to 23.5%.