How to find monthly interest rate
Most often, borrowers receive their interest rates as an annual percentage. It can be beneficial to translate this rate into a monthly percentage to better understand how the interest affects your loan payments. Here is a list of steps you can follow to help you discover your monthly interest rate:
example:
1) Convert percentage to a decimal: The first step is to take the annual rate percentage and convert it into a decimal by dividing the number by 100. For example, if your annual interest rate is 15%, dividing 15 by 100 would equal 0.15.
2)Divide by 12: Next, divide the translated percentage by 12, the number of months in one year. If your translated percentage was 0.15, dividing that number by 12 would equal 0.0125.
3)Multiply by the value of the asset: Multiplying your calculated amount by the value of the asset or loan, allows you to see how much extra money is being added to your loan payments every month. Using the previous value of 0.0125, if you took out a loan of $5,000, the calculation would be 0.0125 x 5,000 = 62.5. This means that every month, your interest rate adds $62.50 to your loan payments.