How to Calculate Interest on a Loan - TheStreetHow to Calculate Interest on a Loan| Loans | MozoLoan Payment Formula (with Calculator)How to Calculate Interest Rates on Bank Loans6/15/2019 · The formula for simple interest can be derived as a product of outstanding loan amount, interest rate and tenure of the loan. Formula For Simple Interest is represented as, Simple Interest = P r tIf you take out a five-year loan for $20,000 and the interest rate on the loan is 5 percent, the simple interest formula works as follows: $20,000 x 5 = $5,000 in interest You might ;· The formula for finding simple interest on a loan is: Principal x Interest rate x Time amount = Simple interest. So if we stick with a one-year bank loan as an example, let's add onto the annual rate to a monthly rate by dividing by 12 (6% annually divided by 12 months results in a monthly rate). Figure the monthly interest by multiplying the monthly rate by the loan balance at the start of the month ($100,000 multiplied by equals $500 for the first month). Subtract the interest costs from the monthly example, our personal loan repayment calculator shows that on a loan of $20,000 at you would pay: $634 each month, adding up to $2,812 in interest over 3 years, or. $413 each month, adding up to $4,765 in interest over 5 ;· When you know the principal amount, the rate, and the time, the amount of interest can be calculated by using the formula: I = Prt For the above calculation, you have $4, to invest (or borrow) with a rate of percent for a six-year period of time.

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