How to calculate the interest on a bank loan

When applying for a loan may be useful to know the different ways that financial institutions have to calculate the interest payable each year.

Learn how to calculate the interest on a bank loan is the best way to know the monthly amount you pay to the bank. To do this, each bank or savings using a reference to mark the interest rate on their loans, which also have to add a series of commissions for the opening of bank loan and other expenses that are charged to the customer?

Types of Loans

First, we must distinguish between different bank loans offered by financial institutions. The two most common types are mortgage loans for the purchase of housing and other buildings, and personal, to finance consumer goods and automobiles, mainly.

In the case of mortgage loans, the most common reference to calculate the interest rate is Euribor, which each entity has a differential based on the degree of risk of the operation and the degree of customer loyalty with the financial institution when applying for the bank loan. The first figure is the nominal interest rate or TIN.

This interest must be added the cost of study and loan origination fee. The total of the annual interest that is subject to the bank loan is called Annual Percentage Rate or APR.

The interest rate for personal loans is usually considerably higher than those of the mortgages. The reason is easy, being unsecured lending; personal loans are more expensive, as a protection against possible financial institution defaults.

Monthly

Once you know the APR of the loan, you can calculate the amount of interest on the loan to be paid in each installment, but it depends on the conditions of each bank loan, as the bank can offer grace periods in which, by example, the customer only pays for a specified period of credit loan interest, not the principal thereof. Besides, for calculating monthly interest bank loan requested should take into account their maturity.