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Ask your lender for the interest rate and type of interest charged on your loan. You need to know the principal (or amount) of the loan, the interest rate, and if the interest is charged to you as simple or compound.

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Multiply the interest rate (convert to a decimal by dividing the percentage rate by 100) times the principal balance of the loan times the term in units of years. Then, divide that number by 100 to find out the interest charged during that time period. For example, if you borrow $10,000 at 6 percent interest for 1 year, you are charged $600 in simple interest.

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Calculate compound interest using this formula: P(1+(r/100)^n. Multiply the principal (p) by 1 plus the interest rate (as expressed in decimal points) and take that number to the "n" value (n representing the number of years of the loan). For example, $10,000 borrowed at 6 percent interest for 1 year will cost you $612.64 if the interest is compounded quarterly.