How do you calculate interest ?

[Screenwipe]

My dad had a loan for �27000 and was charged 2% over base. (So was charged 6.5%) He only had this loan for 6 weeks. How do I work out what the interest should be? Thanks.

[Loosehead]

(42/365) x (6.5x27000/100) = 201.95

assuming no payments where made in the interim, the interest will be slightly less if that's the case

[C-C]

�27,000 x 6.5% divided by 365 (days of year) and multiply by 42 (6 weeks = 42 days).

Total: �201.95

[Loosehead]

err, I said that, did you read the answer above?

[EBsonicBoom]

The above is not quite right, but good effort Loosehead and C-C.

Interest from loans are usually (not allways) calculated on an APR (Annual Percentage Rate). If the 6.5% above is APR that rate only relates to a period of 1 year (or 52 weeks or 365 days).

The formula for calculating interest for periods above or below is as follows:-

(1+i)^n-1 where i = interest & n = time

6/52 = 0.1153846 (n)

therefore
(1 + 0.065)^0.1153846 - 1 = 0.0072928 or 0.72928%

�27,000 x 0.72928% = �196.91 (or thereabouts)