Interest rate is the amount expressed as a rate of interest which forces by the lender to the borrower for the use of assets. It is registered in the normal position on an annual basis, and knows the annual interest rate. It is possible that the borrowed assets in the form of cash or Consumer or large assets such as buildings, vehicles or goods.
From the consumer's perspective, is the expression of the interest rate of annual returns when this ratio to be acquired or to provide investment certificates or deposits, for example, account. And when they are paying interest rates, return for a payment credit card or a mortgage loan or mortgage, expressed as annual interest rate.
How to calculate the interest rate
Interest rates are imposed by the creditor as compensation for losses resulting from the use of assets. In the case of lending money, the creditor can invest the money instead of lending. When lending out a large, have to assume that the creditor could have people generate income through the asset in the event decided to use it himself.
The interest rate is calculated by dividing the value of the interest on the principal amount of value. Interest rates often change as a result of inflation and the policies of the Fed board. For example, if the creditor (such as a bank) to impose $ 90 a year on a loan of $ 1,000, then the interest rate is 90/1000 * 100% = 9%.