A loan interest rate is a cost of using borrowed funds, usually calculated as a percentage per day. In the calculator, the rate is usually not indicated explicitly. To calculate it, you need to divide the daily overpayment by the loan amount. The daily overpayment is easy to calculate by dividing the loan overpayment by the number of days of use.

The interest rate is not the net profit received by a credit union. Its size is influenced by the cost of attracting funds from investors, operating costs, risk insurance, taxes, and expected profits. A profit of 10-15% is considered normal for a lender.

The maximum credit unions can charge on loans is 12.68% APR. The average rate charged by a credit union on a one-year personal loan is 7.1%.

## How do I find out the loan interest rate?

You can calculate the full loan interest rate by dividing the overpayment by the number of days and the loan amount.

**Daily interest rate = (overpayment) / (loan term) / (loan amount) * 100%.**

## How is the interest rate formed?

The interest rate in each case is calculated individually. Its size depends on how each particular company assesses the risk of a loan. The following parameters affect the value of the interest rate:

- Loan amount – the more money you borrow, the lower the interest rate;
- Loan term – the longer the time of using borrowed funds, the lower the percentage of overpayment;
- Client category – regular bona fide borrowers are offered minimum interest on loans. New clients will be offered a rate slightly higher than the standard rate, in some cases, they will receive a free loan;
- Commissions. Some lenders may charge additional fees. Study the contract carefully and use trusted companies based on our rating.