Loan interest
Date: Sun, 11/25/2007 - 19:14
How do I figure this out? A family member let's 4000.00 ride on my credit card for three years. I paid on the card monthly, so no late fees, but now she is ready to pay me back. The interest rate is 5% for 36 months. How much does she now owe?
according to my calculations(principalxinterestxtimes) it comes
according to my calculations(principalxinterestxtimes) it comes out to around $7200.00. any help?
5% is an annual percentage rate. To figure out the total intere
5% is an annual percentage rate. To figure out the total interest, you can do the calculation one of two ways:
1) Figure out the interest charged per year:
.05 X 4000 = $200 /yr -- $200 X 3 years = $600 total
-or-
2) Figure out the interest per month:
For this calc you first need to turn 5% apr into a monthly rate. 5/12 = .416666 % per month.
Then .41666 % X $4000 = $16.66/month interest --- $16.66 X 36 months = $599.76 (or $600 without rounding)
Either way it is right at $600 interest, plus the $4000 principle, she owes you $4600.
