2,100 LOAN AT 13% ADD ON INTEREST FOR 3 YEARS. HOW DO I CALCULATE THE APR?
To calculate the Annual Percentage Rate (APR) for a loan with add-on interest, you can follow these steps:
Step 1: Determine the total interest paid over the life of the loan.
To calculate the total interest, multiply the loan amount by the interest rate and the loan term.
Total Interest = Loan Amount * Interest Rate * Loan Term
In this case, the loan amount is $2,100, the interest rate is 13% (0.13 as a decimal), and the loan term is 3 years.
Total Interest = $2,100 * 0.13 * 3 = $819
Step 2: Calculate the APR.
The APR accounts for the total interest paid and the loan term. It represents the yearly interest rate on the loan.
APR = Total Interest / Loan Amount * 100
APR = $819 / $2,100 * 100 ≈ 39.0%
Therefore, the Annual Percentage Rate (APR) for a $2,100 loan with a 13% add-on interest for 3 years is approximately 39.0%.
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http://en.wikipedia.org/wiki/Annual_percentage_rate