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Loan interest calculator

Everything paid back over the loan, interest included.

Interest over the whole loan

15% of the loan

Interest in pounds
£1,800
Flat rate a year
5%

Working

  1. Interest in pounds = total repayment − amount borrowed = £13,800 − £12,000 = £1,800.
  2. Interest (on loans) in % = (total repayment − borrowed amount) ÷ borrowed amount × 100 = £1,800 ÷ £12,000 × 100 = 15%.
  3. Spread evenly over 3 years: 15% ÷ 3 = 5% a year on the amount first borrowed (a flat rate).

Your result

15% of the loan. Borrowing £12,000 and paying back £13,800 costs £1,800 in interest: 15% of the amount borrowed.

Learn how interest rates affect business

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Interest on a loan as a percentage is (total repayment − amount borrowed) ÷ amount borrowed × 100: borrowing £12,000 and repaying £13,800 is 15%.

Questions people ask

What is the interest on loans formula in Edexcel GCSE Business?

Interest (on loans) in % = (total repayment − borrowed amount) ÷ borrowed amount × 100. Borrowing £12,000 and repaying £13,800 is £1,800 of interest, 15% of the loan.

Is this the same as the interest rate a bank quotes?

No. Banks quote a yearly rate, usually the APR. This formula gives the total interest over the whole loan as a share of what was borrowed. Over 3 years, 15% is a flat 5% a year, and the APR on a loan repaid monthly would be higher than that.

Do AQA students need this formula?

AQA's specification does not print it, but it does ask how changes in interest rates affect businesses that borrow, and percentage calculations like this one appear across both boards.

Keep going

How we work this out

What it does

Enter the amount borrowed and the total repaid to get the interest in pounds and as a percentage of the loan, the way Edexcel GCSE Business asks for it.

Interest on loans as a percentage of the amount borrowed, the formula in Edexcel 1BS0 Appendix 3, with an optional flat yearly rate.

Method

  1. Interest in pounds = total repayment − amount borrowed.
  2. Interest (on loans) in % = (total repayment − borrowed amount) ÷ borrowed amount × 100.
  3. With the length of the loan, the flat yearly rate = total interest % ÷ number of years.