Calculating interest on Credit exchange

At a first glance, the formula for calculating monthly interest on credit exchange looks very complex and not very clear. To help you with it, below we will uncover the secret of how it is calculated. This calculation depends on two numbers:

  • the difference between the borrowed amount and the amount to be repaid
  • credit term in months

For the calculation we will need values known to the user:

  • Borrowed amount - BA
  • Repayment amount - RA
  • Credit term in days - CTD

Actions:

  • Calculate the difference between the BA and the RA: _Difference = RA - BA_
  • Calculate the credit term in months (CTM): _CTM = CTD : 30_
  • Calculate the monthly interest (MI)): _MI = (Difference * 100 : BA) : CTM_

Example:

Borrowed amount: $10
Amount to be repaid: $15
Credit term in days: 60 days

Calculation:
Difference = 15 - 10 = 5 ($)
CTM = 60 : 30 = 2 (months)
MI = (5 * 100 : 10) : 2 = 25 (%)

See also:
Credit Exchange Interest