# Common Loan Calculator

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A loan is the amount of money that can be obtained from a bank or financial institution at some interest rate. The principal amount, interest rate, and date of payment are some main factors of a loan. Whenever you take a loan, the lender charges some interest after considering the inflation rate to make a profit. Different types of loans have different interest rates and compounding periods. Often compounding of interest can higher the amount of interest you pay on the loan. It is necessary to calculate compound interest on an auto loan so that you can know how often interest compounds and the annual interest rate. Usually, financial organizations provide you with complete details of loans and interest rates but you can personally calculate them.

## Tips for Common Loan Calculations

If you are worried about the total amount of interest then you have to use the following useful tips to perform some common loan calculations:

• In the first step, find the annual rate and divide it by the total times of each year compounding to get the periodic rate. For instance, if you have a loan that compounds interest daily and carries an annual rate of 18 percent divide 0.18 by 365 to find a daily rate of 0.0005.
• Add 1 to the periodic rate such as 1 + 0.0005 = 1.0005.
• Raise the answer to the power of the number of days that interest accrues before you make payment. For example, if you make a payment every 30 days then raise 1.0005 to the 30th power to get 1.015109259.
• Subtract 1 from this answer to get a rate of interest such as after subtracting 1 from 1.015109259 to get 0.015109259.
• Multiply the result by the balance of your loan to find interest compounding on your auto loan. According to the current example, if you have \$20,000 remaining to pay on your loan then multiply 1.015109259 by \$20,000 to find \$302.19 of interest accrues.

Here is a preview of a worthy Common Loan Calculator that offers all common loan-related calculations,