You will need
- Calculator, paper, pen.
To calculate the amount of interest under the loan agreement, you need to determine how interest on the terms of the contract. If the contract is not agreed a different procedure for the calculation of interest on the loan, they are charged according to the classical scheme. This happens on the sum of the outstanding principal balance on the loan is based annual interest rate and the calculation period of the month.
The first interest amount on the loan is deducted from the full amount of the loan according to the formula: the loan amount multiplied by the annual interest rate in fractions, then divide by the number of days in the current year and multiply by the number of days in the payment period (month). Amount % = loan Amount * %interest in shares / 365 * 31
If the conditions of the loan agreement provide for the use of borrowed money all period with monthly payment only, the interest amounts without partial cancellation of the debt, the amount of interest on the loan is kept throughout the calculation period. I.e. monthly charges the same amount of interest for the use of money, and at the end of the period of the contract is paid the loan amount in full.
If the contract provides for monthly repayment of principal and interest, then calculating interest for subsequent periods is calculated from the sum of the actual balance owed on the loan. Ie is calculated monthly amount of repayment of principal and the interest amount according to the above formula so that the amount of principal is taken already, minus the paid part of the debt in the previous periods (the actual balance of the loan).
For the lender is the most lucrative scheme of interest is the monthly interest and the payment of the entire amount of the debt at the end of the loan period. For the borrower, more profitable conditions for partial monthly amortization of the loan and monthly interest paid for the use of money from the amount of the actual principal balance.
Before you sign the loan agreement carefully read the conditions of the loan. Depending on the scheme of charge of percent for the use of money reduces or increases the total overpayment (the total amount of interest) for the use of borrowed funds.
Advice 2 : How to calculate interest on granted loan
In the business practice widely used loans between legal entities, issuance by enterprises loans to its employees, founders or third-party nationals. Loan can be provided on a grant basis, and with payment of percent for using means.
Signing a loan agreement, provide in order of calculation and payment of interest at maturity, monthly, as repayment of principal, etc. in addition, discuss the possibility of using so-called compound interest by adding the amount of interest for a certain period to the original amount of the loan and fees in the total amount. This method is more profitable for the lender, but disadvantageous for the borrower.
If the contract of loan set payment of principal and interest in a lump sum at maturity, monthly interest charge according to the formula: interest = (loan amount) x (annual interest rate) x (number of days in month) / 365 (366) days a year. When calculating, consider the actual number of days in a year, and in each of the months. The starting point for interest accrual is the day following the date of the loan.
In that case, if the contract established a schedule of principal repayment, charge interest to the extent of its payments. In this case, use the following calculation formula: interest = (outstanding loan balance) x (annual interest rate) x (number of days in period) / 365 (366) days a year.
The loan agreement may also provide for a partial refund as the borrower's available reserves to calculate on loans. In practice there are cases when the loan is repaid in tranches several times a month or a week. In such cases, it is convenient to charge interest on the outstanding balance daily in electronic form.
Create the Excel spreadsheet include columns: date, amount owed, interest rate, number of days in the month, the number of days in a year. Add a total column "Accrued interest", write the formula and then copy it for each day. Daily record in the table the balance of the debt, and at the end of the month summarize the automatically calculated interest.