The MOST ACCURATE and DETAILED way to calculate bank loan interest rates

1. 4 ways to calculate loan interest rate bank today

Currently, on the market, there are 4 basic interest rate calculation methods, including principal balance, decreasing balance, fixed interest rate, and floating interest rate. Understanding the nature and detailed interest rate calculation will help customers choose the appropriate debt repayment method. 

1.1. How to calculate loan interest rate based on principal balance

When calculating the loan interest rate based on the principal balance, the monthly interest will remain stable and is calculated based on the original loan amount throughout the loan term. 

With this method, monthly interest will be calculated according to the following formula: 

For example, Mr. A borrows 100,000,000 VND from the bank for 12 months with an interest rate of 10%/year.

• The principal amount to be paid monthly is: 100,000,000 / 12 = 8,333,333 VND.
• The monthly interest payment is: (100,000,000 x 10%) / 12 = 833,333 VND.
• Total monthly payment: 8,333,333 + 833,333 = 9,166,666 VND.

1.2. How to calculate loan interest rate based on decreasing debt balance

The method of calculating interest according to the decreasing debt balance is understood as when the interest rate applied to the remaining debt balance gradually decreases over time, meaning the amount of interest payable decreases with each repayment period.

With this method, monthly interest will be calculated according to the following formula: 

For example, Mr. A borrows 100,000,000 VND for 12 months with an interest rate of 10%/year.

• Monthly principal payment = 100,000,000 /12 = 8,333,333 VND.
• First month's interest = (100,000,000 x 10%)/12 = 833,333 VND.
• Total amount payable for the first month: 8,333,333 + 833,333 = 9,166,666 VND.
• Second month's interest = (100,000,000 - 8,333,333) x 10%/12 = 763,889 VND.
• Total amount payable for the 2nd month: 8,333,333 + 763,889 = 9,097,222 VND.
• Calculate similarly for the following months until the end of the loan term.

1.3. How to calculate loan interest rate based on fixed interest rate 

Fixed interest rate calculation is understood as when the interest rate applied to the debt balance does not change over time, which means that the amount of interest paid for each repayment period is unchanged.

With this method, monthly payments will be calculated according to the following formula: 

For example, Mr. A borrows 100,000,000 VND for 12 months with an interest rate of 10%/year.

Monthly payment amount = 100,000,000 x 10% x (1+10%)^12 / [(1+10%)^12-1]= 11.000.000.

1.4. How to calculate loan interest rate based on floating interest rate

Floating interest rates are calculated based on market indexes and are likely to change over time, depending on the financial fluctuations of the market. 

The formula for calculating floating interest will be as follows:

In there:

• Base interest rate is the interest rate regulated by the Central Bank. 
• Interest rate margin is the adjustment level of a financial institution or bank based on the current financial market situation. 

During the initial period, the amount of interest payable each month will be calculated according to a fixed interest rate previously determined: 

After the interest rate incentive period, the bank will calculate interest based on market interest rate fluctuations: 

For example, Mr. A borrows 100,000,000 VND with a fixed interest rate for the first year of 10%/year. In the second year, the bank applies a floating interest rate of 11.5% (base interest rate: 10%/year + 1.5%/year). 

Thus, the amount of money Mr. A is payable is calculated as follows:

• First year interest amount: 100,000,000 x 10% = 10,000,000 VND.
• Second year interest payable: 100,000,000 x 11.5% = 11,500,000 VND.

2. Which bank loan interest rate calculation method should I choose?

You can consider factors such as loan needs, personal financial situation as well as the loan term to decide on the appropriate interest payment method. 

If you choose to calculate the interest rate based on the principal balance or a fixed interest rate, you can know the exact amount to pay monthly because the interest rate will be fixed throughout the loan term. Therefore, you can be proactive in arranging your financial plan. 

If you choose to calculate interest based on decreasing balance, you will have to pay a decreasing amount of interest each month. So you can reduce the pressure of paying interest over time. 

If you choose to calculate floating interest rates, you may face some risks, such as rising interest rates when the market fluctuates. However, if you carefully learn about interest rate trends as well as understand the interest rate adjustment periods in the market at each time, this is definitely a reasonable choice so you can repay the loan optimally. 

3. An accurate and fast bank loan interest calculator

Currently, many banks integrate extremely convenient interest rate calculation tools. You just need to fill in the necessary information, such as loan amount, interest rate, time..., and the tools will help you calculate and return results accurately and quickly, the amount you need to pay each month. 

In addition to the tools integrated on each bank's website, you can also refer to several other loan interest rate calculation applications and websites such as ONUS, LuatVietnam…

You can calculate the monthly payment amount with just 4 simple steps below:

• Step 1: Adjust the amount you want to borrow.
• Step 2: Fill in the loan term.
• Step 3: Fill in the interest rate (%/year).
• Step 4: Choose the method of calculating interest based on principal balance or decreasing balance.

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At the Bank Share trading Southeast Asia SeABank, we strive to provide preferential loan opportunities to best support customers in buying a house, car, or business development. 

• Diverse loans for business, consumer, real estate...
• Proof of income is simple and flexible 
• Competitive interest rates compared to the market
• Receive a grace period on principal and support for pre-disbursement to repay loans from other banks

Above are detailed instructions on how to do it calculate bank loan interest rates most popular today. If you have any related questions or need a bank loan with preferential interest rates, you can contact this phone number. 1900 555 587 or visit the website www.seabank.com.vn for detailed answers.