How to get the interest rate per month?

How to calculate monthly interest rate?

Figuring out the monthly interest is kinda tricky, but I've got the hang of it after dealing with my car loan. Took it out back in May '22 from First Community Bank.

First, you gotta turn the yearly interest (like 6%) into a decimal. So, 6 divided by 100 gives you 0.06.

Then, divide THAT by 12 because, well, there are 12 months in a year. 0.06 divided by 12 is 0.005.

Finally, multiply that tiny number by your loan amount (mine was $25,000). So, 0.005 times $25,000 equals $125. That was my monthly interest payment.

It's simple math, but honestly, it took me a few tries to get it right. I even used a calculator app on my phone just to be sure. Now, remembering back to my loan (it was a five-year loan with 6% annual interest) it adds up!

To calculate monthly interest: Divide the annual interest rate (as a decimal) by 12, then multiply by the principal amount.