Currently, the form of bank loan installment payment is a popular service that many people choose. But not all customers know How to calculate interest on installment loans?. And this is still a dilemma for most people. The following article will equip you with basic knowledge about the simplest installment loan interest rates today. Please read for reference!

How to calculate interest on installment loans?
How to calculate interest on installment loans?


You may not know:

  • What is the interbank rate?
  • What is due date?

Which Bank’s Lowest Loan Interest Rate 2022?

10 banks with the lowest lending rates

BankUnsecured loanMortgage loan
Vietnamese version17-186.5
VPBank206.9 – 8.6
ACB277.5 – 9.0
Sacombank9.57.5 – 8.5
BIDV11.96.6 – 7.8
TPBank176.9 – 9.9
Maritime Bank10 – 176.99 – 7.49
Vietcombank10.8 – 14.47.5

10 Banks that provide mortgage loans with the lowest interest rates

BankRed book mortgage interest
Loan rateEarly repayment fee
Mortgage of red book bank Agribank7.580-85% of collateral value
Mortgage loan of red book of BIDV bank1180% of collateral valueFree
Vietcombank red book mortgage loan7.770% of collateral value1% on prepayment
Mortgage loan red book bank Vietcapital870% of collateral value3% on prepayment
Mortgage loan of Vietinbank red book770% of collateral value2% on prepayment
HSBC red book mortgage loan760% of collateral value3% on prepayment
VPBank red book mortgage loan9.675% of collateral value4% on prepayment
Sacombank red book mortgage loan12.3100% collateral value2% on prepayment
Mortgage loan of red book bank VIB10.270% of collateral value3% on prepayment

5 Banks with the lowest car loan interest rates

BankBank loan interest rate (%/year)
Vietnamese version6.5

What Is Bank Loan Interest Rate?

Banking services installment cash loan is a method of borrowing money in which the repayment amounts in periods are equal. In which, the amount of interest payable plus the principal amount. The amount that the customer has to pay to the bank for each term is equal according to the contract, and the interest is calculated based on the principal balance and the actual term of the term.

Installment bank loan interest rate is a certain interest rate that the borrower must pay to the bank when it is due for periodic loan payments. Bank loans have many types of interest rates. Depending on the time perspective, or based on the specific characteristics of each loan product, we will have many different types of loan interest rates.

installment bank loan interest rate
Loan form, simple interest calculation

Popular Types of Bank Loans

The most common types of loans today are:

  • Unsecured loan: a form of bank loan that does not need collateral and is based entirely on the borrower’s reputation.
  • Mortgage loan: have collateral to get a loan. Bank loan interest rates of mortgage loans will be divided into different interest rates depending on the loan purpose, including:
  • Overdraft loan: a form of loan for individual customers when the need to use exceeds the amount currently in the current account. Depending on the creditworthiness, the bank will grant customers a maximum limit to be able to overspend when the account balance is zero.

Common Types of Bank Loan Interest Rates

Fixed interest rate

Fixed interest rate is the same interest rate each month, which means that during the loan term, your loan interest rate will not change, reducing pressure on borrowers as well as avoiding risks of volatility. interest rate.

Eg: Ms. Linh borrowed VND 20,000,000 within 1 year with a fixed interest rate of 12%/year. Thus, the amount of interest Ms. Linh has to pay every month is:
200,000 VND (20,000,000 x (12%/12)) for 1 year.

Floating rate

Floating interest rate is an interest rate that changes depending on regulations and policies of banks from time to time and is usually calculated by the formula:

Cost of Capital + Fixed Rate Range or including: fixed cost of capital + variable interest margin

Example of floating interest rate: Ms. Ha Mortgage loan amount of VND 20,000,000 in 1 year. With an interest rate of 1%/month within the first 6 months and after that 6 months, the interest rate will be floating.

  • According to the calculation of installment interest, the amount of interest Ha must pay each month for the first 6 months will be:
    200,000 VND (20,000,000 x 1%) within the first 6 months.
  • In the 7th month, the amount of interest Ms. Ha has to pay will be based on the current market interest rate (This interest rate may be higher or lower than the original interest rate stated in the contract).

Mixed interest rate

The fixed interest rate and the floating rate, when combined, create a compound interest rate. The way it works is that at first a fixed rate will be applied and then a floating rate will be applied. The timelines are changed based on the agreement between the two parties.

Eg: Assume $100 is the principal of the loan, and the compound interest is 10%.

  • After one year you have $100 and $10 of interest, for a total of $110.
  • In the second year, interest (10%) is applied to the top ($100, resulting in $10 interest). And accrued interest ($10, resulting in $1 profit). For a total of $11 interest for that year, and $21 for both years.

Find out what is the nominal interest rate?

How To Calculate The Most Accurate Bank Loan Interest

With the current mechanism of borrowing money and paying interest at banks, many customers feel confused about the amount they have to pay. Depending on different banks, there will be different ways of calculating interest when registering unsecured loan.

The general formula for calculating loan interest is as follows:

Loan interest = [(Số tiền vay*Lãi suất vay)/365 ngày]*actual loan days

Here are 3 mechanisms for calculating interest on installment loans at banks in the market

How to calculate bank loan interest according to the decreasing balance?

The formula for calculating interest on a decreasing balance:

  • Monthly principal = Loan amount/Loan number of months
  • First month interest = Loan amount * Monthly loan interest rate
  • Interest in the following months = Remaining principal amount * Loan interest rate

Specific examples:

Customer A borrows money from the Bank with the amount of VND 50 million for 12 months. Applying the installment interest calculation on the principal balance, we have:

  • In the first month, the outstanding balance is 50 million, interest = 50 million x 12%/12 = 500,000 VND.
  • The next month, pay the principal 5 million, interest = (50-5) million x 12%/12 = 450,000 dong.
  • In the 3rd month, the principal is paid 5 million VND, interest = (45-5) million x 12%/12 = 400,000 VND.

Continue the same calculation in the following months until customer A has paid off his debt.

How to calculate bank loan interest based on the initial loan balance?

Formula for calculating interest rate:

Amount you have to pay monthly = Principal balance * annual interest / loan period

This is an interest rate calculation that stays the same until the loan is paid in full, even though the principal is reduced each month.

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Eg: You borrow 10 million VND to pay in 12 months at an interest rate of 12%/year.

  • The amount to pay the bank monthly is 10 million / 12 months ~ 833,333 VND / month
  • The monthly interest payable to the bank is (10 million*12%)/12 months = 100,000 VND/month
  • The monthly payment amount is VND 933,333

Which Bank Loan Interest Rate Is More Profitable?

Depending on the usage needs and the type of loan, to choose the appropriate method of calculating the bank loan interest rate, each method of calculating the loan interest rate has its own advantages and limitations.

The method of calculating bank loan interest on a decreasing principal balance is often applied to consumer loan needs, production and business loans in the form of collateral. While the method of calculating bank loan interest on the initial balance is not recommended for loans such as consumer mortgage loans.


Here is some information about how to calculate interest on installment loans. Hope this article will help you choose the right loan. If you still have questions, want to learn more information about this form of loan, please contact us immediately BankTop – Advice on low interest bank loans to get the best support and advice.

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