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Chapter 17. Building Loan Formulas > Calculating the Interest Rate Required for...

Calculating the Interest Rate Required for a Loan

A slightly less common loan scenario arises when you know the loan term, payment, and principal, and you need to know what interest rate will satisfy these parameters. This is useful in a number of circumstances:

  • You might decide to wait until interest rates fall to the value you want.

  • You might regard the calculated interest rate as a maximum rate that you can pay, knowing that anything less will enable you to reduce either the payment or the term.

  • You could use the calculated interest rate as a negotiating tool with your lender by asking for that rate and walking away from the deal if you don't get it.


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