IFRS: training, methodology and implementation practice for companies and specialists...
In order for the average company to fully function, it needs additional and constant sources of financing. In addition to its own funds, an enterprise can take advantage of borrowed resources from credit institutions. For example, an entrepreneur or the head of a company may well contact a bank and apply for a commercial loan or take out a consumer loan.
Each client can independently determine the interest rate in order to choose the optimal one in the future. At the same time, the difference in indicators in different banks seriously complicates the choice of a suitable option. In this regard, an indicator such as the weighted average is used interest rate on loans. Our article will focus on how this term is defined, as well as what formulas are used to calculate this indicator. We will say a few words about the use of the final indicator.
The weighted average lending rate may have different definitions depending on the level at which it is used. For example, when we're talking about about a financial enterprise, this indicator will be defined as the cost of all loans previously issued and received. In other words, we are talking about the average value of the loan portfolio. This indicator is considered internally to analyze the company's performance.
If we talk about this indicator as an integral part of the general banking system, then the term will mean the cost of all loans in all banks of the Russian Federation. An indicator of this level is used by the Central Bank of the Russian Federation to determine the efficiency and success of the banking system. In addition, the average bid can be used as a criterion for assessing the dynamics of promotion credit policy in the country.
What types of loans are involved in determining the indicator?
The calculation of the average indicator is mandatory, and this approach is due to the need to analyze the overall activities of the company. Using simple indicators characterizing the lending procedure, it will be impossible to perform calculations. In this regard, specialists conducting calculations focus on various groups of loans issued by banks.
In particular, we are talking about the following loan options:
- provided for a long period of time;
- issued in the short term;
- investment;
- funds issued by banks as current assets.
Additionally, it is worth noting that the average interest rate can be calculated by the Central Bank of the Russian Federation separately for individuals. individuals and separately for companies. Both indicators are available for general use. For example, last year this figure was about 15% per annum.
For what purpose is the average cost of loans calculated?
In order for banking institutions to operate as stably as possible, it is necessary that they can control their own liquidity. In this case, we are talking about the real possibility of assets being sold at any convenient time. Essentially, this means that the property can be sold as quickly as possible at the market price.
When analyzing current liquidity, a company may discover that it has excess liquidity, that is, when there are a lot of such assets. To effectively use these funds, you can issue them as interbank loans. The situation is considered in the opposite way when banks have assets with low liquidity and are forced to attract assets from outside.
When determining interest rates, the classic Keynes rule is used, namely the relationship between supply and demand. This point determines the need to calculate the average interest rate on loans. For example, the indicator allows you to respond in a timely manner to changes in financial market conditions, as well as determine the need to increase or decrease interest rates on a loan.
What formula is used for calculations?
To correctly determine the indicator, you need to use a special formula. The calculation scheme differs significantly from determining a simple average value. Here, not only the interest rate plays a significant role, but also the loan amount. The formula looks like this:
SPS=∑(K*P)/∑K, where:
- SPS – weighted average percentage indicator;
- K – loan balance;
- P – loan rate
To understand the calculation procedure, it is worth using a practical example. Let’s assume that there are three loans, and each has its own parameters:
- 1 – 15 million rubles. at 10%;
- 2 – 10 million rubles at 8%, but 8 million have already been returned;
- 3 - 2 million rubles at 15% with a loan balance of 1.5 million.
The calculation will look like this:
ATP=(15*0.1+8*0.08+1.5*0.15)/(15+8+1.5)*100% =0.097*100%=9.7%, that is, the average is about 10%. Interest rates on loans in foreign currency will be determined similarly, however, when assessing, it is necessary to take into account the exchange rate of the Central Bank of the Russian Federation.
Conclusion
To summarize, it is worth noting that the procedure for calculating the weighted average is quite simple. To do this, you need to know the basic criteria of credit products and be able to use a special formula.
In conditions of constant fluctuations in the market and exchanges, many residents of our country prefer to trust banks to preserve and increase their own capital. To do this, they use a deposit system. Some organizations also follow a similar path, especially when they have monetary units unclaimed in a specific time period.
What caused this interest in bank deposits? First of all, the opportunity to save and slightly increase the deposit amount. But the relatively low risks shown by calculations in the banking system are also of great importance. It is also important to have a choice of deposit programs:
- Long-term investments up to requirement;
- Urgent investments.
However, it is important not only to choose the right type of deposit, but also to correctly determine the bank with which to cooperate. And here the choice largely depends on what interest rate is offered by the bank and how it relates to the weighted average rate.
What is the weighted average interest rate?
The average market deposit interest rate is the average of the rates for all deposits in a particular currency among banks in the country. In this case, contributions from different terms investment and various conditions.
The weighted average rate is also an excellent way to determine the liquidity and reliability of the deposit. Thus, interest rates above the average level cause joy and an instant desire to invest only among inexperienced investors. Other investors understand that behind the tasty offer, in most cases, there is a catch.
For example, a common practice among structures on the verge of bankruptcy is to attract the maximum amount of capital in an attempt to solve their problems. Such banks are willing to take risks and pay for their miraculous relief from problems with increased dividend rates. But what are the chances that the bank will pull itself out of the abyss and not sink to the bottom, dragging your money with it? After all, today the amount of compensation is only seven hundred thousand rubles.
However, the situation does not always look so dire. Sometimes high deposit rates are associated with favorable moments:
- Holidays;
- Bank's anniversary;
- They are offered by young, but already quite reliable structures.
How to correctly calculate the average market deposit rate?
Calculation of the average market interest rate on deposits assumes that it is necessary to take into account all offers on the market, sum them up and divide the result by the number of source banks. That is, we get the following formula:
F=((N_1+ N_2+⋯+N_n))/n
- F – Weighted average interest rate;
- N – Bank rate;
- n – Number of banks.
The resulting calculation can be used to analyze the liquidity and feasibility of your investments.
In the modern economy, it is possible to carry out calculations not only of the average market interest rate for the country, but also to make calculations within the framework of a specific bank or investment portfolio. The following should be taken into account:
- Interest capitalization period;
- Type of deposit;
- Interest rate.
| Options | Options | Description |
|---|---|---|
| Investment type | Up to requirement | Such deposits include deposits that do not have a clearly defined final investment period. The money is simply returned to the investor upon his request. Moreover, the interest on such accounts is lower than on time deposits. |
| Urgent investments | A deposit for a strictly defined period. It has a fairly high interest rate, which makes it attractive. But there is also a drawback: if an attempt is made to withdraw funds from circulation early, the investor is subject to penalties, up to and including the complete cancellation of all dividends. | |
| Capitalization period | 1 month | |
| 1st quarter | Typically, accruals with such a period indicate their frequency, which means we are talking about compound interest. They are characterized by the fact that they are accrued at a certain interval throughout the entire investment period. For example: a deposit was opened for 1 year with compound interest and a capitalization period of 1 quarter. This means that dividends will be paid 4 times a year. | |
| At the end of the period | Investments of this type are distinguished by the fact that dividends on them are accrued at the end of the deposit. That is, if an account is opened for a period of 3 years, then dividends will be accrued once, three years from the date of opening the account. Cases where this type of dividend calculation is used are called deposits with simple interest. |
|
| Interest rate | The specific interest rate determines the extent to which dividends will be accrued. However, it must be carefully analyzed in comparison with the average interest rate. If we talk about the end of 2014, then the average market rates for deposits in domestic currency were: · About 9% for short-term investments; · 9.7% for long-term investments; · Three and thirty-three per cent period for dividends, with an investment period until the requirement for settlement. Current information can always be found in the publications of the Central Bank. |
Methods for calculating the weighted average portfolio rate
For portfolio investments, such a concept as the average market interest rate is also applicable. It is calculated for all deposits, and the method of calculation depends on what deposits are in the portfolio: we are talking about simple interest or compound interest. Although, naturally, they also have their influence 
other indicators:
- Deposit amount;
- Investment period;
- Capitalization period for compound interest;
- Deposit rate.
When it comes to a deposit that is capitalized at the end of the term, where simple interest works, the amount of dividends is calculated using the following algorithm:
- The investment amount must be multiplied by the annual interest rate;
- The result of the 1st point is multiplied by the investment period in days;
- Divide the product by 365, and divide the resulting quotient by 100.
Working with compound interest is more difficult:
- Calculate the total deposit amount taking into account the capitalized amount under the easy interest scheme. The resulting capital is taken as the volume of investment;
- The volume of investment multiplied by the annual interest rate;
- The product is multiplied by the duration of the capitalization period in days;
- Divide the result by 365 and 100;
- Take the resulting quotient as the amount of final dividends for 1 year.
Thus, calculating the weighted average interest rate on a deposit allows not only to analyze and correctly assess the situation on the market and within the banking system. It also serves to evaluate specific contributions and calculate the monetization of dividends.
To obtain accurate information regarding the total cost of all loans. This value is based on the volume of loans provided and their terms.
Calculation of the weighted average interest rate on loans
Many people mistakenly believe that the rate is calculated using the formula:
Iav.v. = (X1+X2+X3+Xn)/n,
where X1, X2, X3...Xn – existing interest rates in one of the banks;
n is the total number of bets available.
However, these calculations will lead to an average value, but not to a weighted average. To correctly calculate the last indicator, you should remember that the cost of using a credit loan directly depends on its amount.
According to this information, we can conclude that if a company has very large loans in its loan portfolio, but with low interest, then the total price of all available loans drops sharply.
Based on this principle, it was decided to calculate not the average value, but the weighted average.
Loan portfolio
Loan portfolio is an indicator of the totality of existing debt on the basis of one enterprise for all active lending operations for a certain period.
You can find out the weighted average loan rate by the remaining debt in each individual loan agreement.
The correct formula looks like this:
Iav.in.=Sum.(Sres.*Itek.)/Sum.Sres.,
where Srest. – balance of loan debt;
ITek. – current interest rate.
For convenience, calculations are carried out in Excel tables using a special formula “SUMPRODUCT”.
Note to consumers!
- It is important to remember that the weighted average interest rate on loans is by no means constant and, depending on a number of reasons and operations performed, may change its boundaries. Affect a decrease or, on the contrary, an increase in the indicator:
- full repayment of the principal debt;
- the company received another tranche or a new loan;
- one of the loans changed its parameters, and the annual rate also changed.
- In order to fully have information regarding the current affairs of the loan portfolio in one of the banks you have chosen, you should carefully monitor the slightest changes in the weighted average rate.
- There is a common misconception that the weighted average interest rate on loans is falling. Does more favorable conditions use of lending resources by improving the financial condition of the entire enterprise. Not at all. Having analyzed all the factors that influence the rate, experts were able to draw up a plan according to which the price for the opportunity to spend the loaned funds tends to a minimum amount. By adhering to the points below, each client can profitably seize the moment and apply for a loan under optimal conditions or transfer an existing lending program in a more comfortable direction.
- enter into agreements under a loan agreement to receive;
- the right tactic is to first close debts that were issued at the highest (of all those existing in your name) interest rates;
- if you can’t immediately deal with loans at “expensive” rates, then it is advisable to make attempts to replace (refinance or restructure, for example) them with more favorable conditions;
- reduce or reduce the annual interest rate on current loans (you can get advice from one of the banks, as they often hold similar promotions, especially for clients with a good credit history);
- Clearly and competently plan your schedule of settlement operations for debt repayment in such a way that by the end of the repayment period, you only have those loans that provide minimum rates.
- The weighted average rate on loans is the most complete reflection of the real cost of all resources of a financial organization that issues loans. Most often, it is this value that shows how effectively all employees of the borrowing structure can work, since their immediate responsibilities include the maximum reduction in prices for the opportunity to use the funds of the credit company to attract more clients and increase cash flow.
The value of the weighted average rate in Russia
It is impossible to answer this question unequivocally, since each region operates with its own indicators. In addition, depending on the type of loan issued (mortgage, car loan, consumer purposes), these characteristics also vary.
Why is there a discrepancy? Because each financial institution, based on the rules of its internal policy, sets completely different conditions for loan programs - some increase the rate, some extend the repayment period, and some require mandatory registration of several types of insurance and securing their loan with collateral of existing real estate or other valuables.
In order not to fall into the trap of high interest rates and long delays, you need to prepare and study the information in advance.
Today, the Internet provides an excellent opportunity to get acquainted with all existing banks and their offers.
In a matter of seconds, it will calculate all the parameters of the desired loan and display all expected payments with an accuracy of the ruble.
Based on the average rates for the programs of each bank, you can easily set the weighted average rate (using a formula).
And when the enterprise has been calculated independently, then all that remains is to choose the most optimal option for your case, and feel free to go for money for your needs, be it the purchase of household appliances or the first stone in a new business.
Full functioning of an average company is possible if it has additional and permanent sources of financing. An enterprise can use both its own resources and attract financial resources from credit institutions. For example, the head of a company or an entrepreneur may contact a bank to obtain a consumer loan or a commercial loan.
The interest rate is determined by each client individually. At the same time, choosing the optimal option can be difficult due to differences in indicators in different banks. For this reason, the weighted average interest rate on loans is used. The method for defining the term and the formula for calculating it are standardized and used in all banks.
Definition of the term
Weighted average interest rates on loans provided are determined depending on the level of their use. Index financial enterprise is defined as the total value of previously issued and received loans. Simply put, this term refers to the average price of a loan portfolio. The indicator is considered within the company in order to analyze the effectiveness of its activities.
Within the general banking system, the term refers to the total value of all loans in all banks in the country. The success and efficiency of the banking system is determined based on an indicator of this level. The weighted average interest rate can also be used as a criterion for assessing the dynamics of credit policy progress.
Types of loans to determine the indicator
The weighted average interest rate of the Central Bank of the Russian Federation on loans is calculated without fail, which is due to the need to analyze the company’s activities. The required calculations cannot be performed using simple indicators characterizing the lending procedure. For this reason, experts take into account the various categories of loans issued by banks when making calculations.
In particular, the following loan options are used:
- With a long installment period.
- Investment.
- Provided for a short period of time.
- Funds issued by the bank in the form of current assets.
It is worth noting that the weighted average interest rate of the Central Bank of the Russian Federation is calculated for individuals and companies. Both indicators are publicly available: for example, last year the indicator was 15% per annum.
What is included in bank assets?
To assess the liquidity of a credit institution, you need to know what is included in their assets. Bank assets refer to resources owned by the organization. The company may dispose of them at its own discretion.
Bank assets include:
- Own resources.
- Cash balances on current accounts belonging to legal and individuals.
- Deposit accounts owned by organizations.
- Private deposits.
- Interbank and similar credit products.
An overly liquid bank that falls out of balance begins to lose its existing profit, since free funds can be put into circulation and begin to receive a percentage of profit from them, but during the time period that the money was in the account, it lay as a useless burden, and not worked.
Why is the average cost of loans calculated?
Commercial financial organizations in Russia regulate their own liquidity by attracting third-party resources or placing excess funds they have outside the bank. The resources of commercial banks are considered to be:
- Start-up capital.
- Deposit agreements of enterprises.
- Leftovers Money on settlement or current bank accounts owned by legal entities and/or individuals.
- Bank deposits of the population.
- Other loans, including interbank loans.
An overly liquid commercial financial institution may issue interbank loans to other entities with less liquidity. When there is a shortage of liquidity, on the contrary, commercial banks resort to interbank lending in order to attract resources.
Weighted average interest rates on interbank loans directly depend on the balance of supply and demand for finance in the market. At the same time, interbank credit transactions affect the cost of loans for individuals and the efficiency of financial organizations.
For this reason, the volume of lending transactions in the credit market is regularly monitored and regulated by the Central Bank Russian Federation. He also carefully adjusts interest rates on loans.
A timely and adequate response of the Central Bank of Russia to changes in liquidity in the state banking system and the cost of national resources is possible only with regular and correct calculation of indicators of the weighted average interest rate affecting interbank credit organizations.
Formulas for calculations
The weighted average interest rate on loans to individuals and companies is calculated using a special formula. The definition of the standard average differs from the interest rate calculation scheme: the loan amount plays a significant role in it. The formula for calculation is as follows:
SPS=∑(K*P)/∑K, where:
- ASP - weighted average interest rate.
- K - credit account balance.
- P - credit rate.
Calculation example
A practical example will help you understand the correct order of calculations. You can take out three loans with different parameters:
- The first loan is in the amount of 15 million rubles at 10%.
- The second - in the amount of 10 million rubles at 8% with the condition that 8 million have already been returned.
- The third is for the amount of 2 million rubles at 15% with a loan balance of 1.5 million.
Calculations performed using the above formula allow us to say that the weighted average interest rate is about 10%. Interest rates for foreign currency loans are determined in a similar way, but when calculating them, the main rate of the Central Bank of the Russian Federation is taken into account.
Reducing the average interest rate on loans
Maximum efficient use attracted financial resources are possible at a minimum weighted average interest rate. To maintain it at a low level, you must adhere to several rules:
- Applying for loans at a minimum interest rate.
- Give priority to loans with high interest rates.
- Refinance or restructure a loan subject to an increase in the interest rate during the loan term.
- The debt repayment schedule is drawn up in such a way that at the end of the term only loans with low interest rates remain open.
Within one enterprise, weighted average interest rates on loans must be strictly controlled. This strategy allows you to efficiently allocate the company's resources and maintain the efficiency of its activities.
A similar rule applies to the amount of credit resources in the country, since the efficiency of the state’s financial system directly depends on the weighted average rate. The Central Bank monitors and regulates the rate.
Results
The procedure for calculating the weighted average is quite simple. To do this, it is advisable to know the basic criteria of credit products and be able to use a special formula.
The average market deposit interest rate is the average of the rates for all deposits in a particular currency among banks in the country. In this case, deposits with different investment periods and different conditions are taken into account.
The weighted average rate is also an excellent way to determine the liquidity and reliability of the deposit. Thus, interest rates above the average level cause joy and an instant desire to invest only among inexperienced investors. Other investors understand that behind the tasty offer, in most cases, there is a catch.
For example, a common practice among structures on the verge of bankruptcy is to attract the maximum amount of capital in an attempt to solve their problems. Such banks are willing to take risks and pay for their miraculous relief from problems with increased dividend rates. But what are the chances that the bank will pull itself out of the abyss and not sink to the bottom, dragging your money with it? After all, today the amount of compensation is only seven hundred thousand rubles.
However, the situation does not always look so dire. Sometimes high deposit rates are associated with favorable moments:
- Holidays;
- Bank's anniversary;
- They are offered by young, but already quite reliable structures.
How to correctly calculate the average market deposit rate?
Calculation of the average market interest rate on deposits assumes that it is necessary to take into account all offers on the market, sum them up and divide the result by the number of source banks. That is, we get the following formula:
F=((N_1+ N_2+⋯+N_n))/n
- F – Weighted average interest rate;
- N – Bank rate;
- n – Number of banks.
The resulting calculation can be used to analyze the liquidity and feasibility of your investments.
In the modern economy, it is possible to carry out calculations not only of the average market interest rate for the country, but also to make calculations within the framework of a specific bank or investment portfolio. The following should be taken into account:
- Interest capitalization period;
- Type of deposit;
- Interest rate.
| Options | Options | Description |
|---|---|---|
| Investment type | Up to requirement | Such deposits include deposits that do not have a clearly defined final investment period. The money is simply returned to the investor upon his request. Moreover, the interest on such accounts is lower than on time deposits. |
| Urgent investments | A deposit for a strictly defined period. It has a fairly high interest rate, which makes it attractive. But there is also a drawback: if an attempt is made to withdraw funds from circulation early, the investor is subject to penalties, up to and including the complete cancellation of all dividends. | |
| Capitalization period | 1 month | |
| 1st quarter | Typically, accruals with such a period indicate their frequency, which means we are talking about compound interest. They are characterized by the fact that they are accrued at a certain interval throughout the entire investment period. For example: a deposit was opened for 1 year with compound interest and a capitalization period of 1 quarter. This means that dividends will be paid 4 times a year. | |
| At the end of the period | Investments of this type are distinguished by the fact that dividends on them are accrued at the end of the deposit. That is, if an account is opened for a period of 3 years, then dividends will be accrued once, three years from the date of opening the account. Cases where this type of dividend calculation is used are called deposits with simple interest. |
|
| Interest rate | The specific interest rate determines the extent to which dividends will be accrued. However, it must be carefully analyzed in comparison with the average interest rate. If we talk about the end of 2014, then the average market rates for deposits in domestic currency were: · About 9% for short-term investments; · 9.7% for long-term investments; · Three and thirty-three per cent period for dividends, with an investment period until the requirement for settlement. Current information can always be found in the publications of the Central Bank. |
Methods for calculating the weighted average portfolio rate
For portfolio investments, such a concept as the average market interest rate is also applicable. It is calculated for all deposits, and the method of calculation depends on what deposits are in the portfolio: we are talking about simple interest or compound interest. Although, naturally, they also have their influence 
other indicators:
- Deposit amount;
- Investment period;
- Capitalization period for compound interest;
- Deposit rate.
When it comes to a deposit that is capitalized at the end of the term, where simple interest works, the amount of dividends is calculated using the following algorithm:
- The investment amount must be multiplied by the annual interest rate;
- The result of the 1st point is multiplied by the investment period in days;
- Divide the product by 365, and divide the resulting quotient by 100.
Working with compound interest is more difficult:
- Calculate the total deposit amount taking into account the capitalized amount under the easy interest scheme. The resulting capital is taken as the volume of investment;
- The volume of investment multiplied by the annual interest rate;
- The product is multiplied by the duration of the capitalization period in days;
- Divide the result by 365 and 100;
- Take the resulting quotient as the amount of final dividends for 1 year.
Thus, calculating the weighted average interest rate on a deposit allows not only to analyze and correctly assess the situation on the market and within the banking system. It also serves to evaluate specific contributions and calculate the monetization of dividends.
Example of a formula for calculating the weighted average interest rate in Excel
Let's say we need to find out the weighted average interest rate of an investment portfolio. The figure below shows the original complete investment portfolio. For each investment, its value and percentage rate of return are indicated. Let's say we need to determine the overall interest rate of return for the entire investment portfolio. To determine the level of portfolio return as a percentage, we use the following formula:
In order to calculate the weighted average interest rate, the share for each investment object in the total value of the portfolio is multiplied by the interest rate of return. The SUMPRODUCT function is ideal for multiplying two sets of data (arrays) and then summing the results. The function can have a maximum number of arguments of up to 255, separated by semicolons. But in this formula you need to use only 2 arguments.
The first argument specifies the values of all investments divided by their sum, resulting in five percentages representing the weight of each investment in the portfolio. The Pioneer Eastern European Shares fund accounted for 17%, which was calculated by dividing the amounts of 72,021.35 by 423,655.02. The second argument of the function contains the interest rates of return for each investment. The SUMPRODUCT function multiplies each element in the first argument by the corresponding element in the second argument. Element B2/B7 is multiplied by C2, element B3/B7 by C3, etc. After multiplying all five elements, the function sums the results.
If we had simply used the AVERAGE function to calculate the average interest rate of return, it would have resulted in a value of 5.906%. This is actually less than the weighted average interest rate of the portfolio. For example, the investment “Treasury Fund Top Brands” has a large percentage of profitability, as well as a larger share in the investment portfolio than other positions.
How to calculate the weighted average interest rate in Excel step by step
In the above example, all computational operations are implemented using the SUMPRODUCT function in the process of calculating the weighted average. These calculations can also be implemented using simple functions written in adjacent neighboring cells. The figure below shows the same calculations as in the previous example, but instead of the SUMPRODUCT function, a slightly different method is used. In separate cells, the share in the portfolio for each individual investment is calculated, after which the influence of each percentage of return on the final result is calculated, and at the end all results are summed up by the usual SUM function.
Excel is the most versatile analytical tool that is perfect for performing statistical analyzes of data. To do this, Excel has a large arsenal of special statistical functions. Next, we will consider formulas used for analyzing statistical data, for example, for averaging them, segmenting them, or calculating frequency graphs.
For what purpose is the average cost of loans calculated?
In order for banking institutions to operate as stably as possible, it is necessary that they can control their own liquidity. In this case, we are talking about the real possibility of assets being sold at any convenient time. Essentially, this means that the property can be sold as quickly as possible at the market price.
When analyzing current liquidity, a company may discover that it has excess liquidity, that is, when there are a lot of such assets. To effectively use these funds, you can issue them as interbank loans. The situation is considered in the opposite way when banks have assets with low liquidity and are forced to attract assets from outside.
When determining interest rates, the classic Keynes rule is used, namely the relationship between supply and demand. This point determines the need to calculate the average interest rate on loans. For example, the indicator allows you to respond in a timely manner to changes in financial market conditions, as well as determine the need to increase or decrease interest rates on a loan.
What formula is used for calculations?
To correctly determine the indicator, you need to use a special formula. The calculation scheme differs significantly from determining a simple average value. Here, not only the interest rate plays a significant role, but also the loan amount. The formula looks like this:
SPS=∑(K*P)/∑K, where:
- SPS – weighted average percentage indicator;
- K – loan balance;
- P – loan rate
To understand the calculation procedure, it is worth using a practical example. Let’s assume that there are three loans, and each has its own parameters:
- 1 – 15 million rubles. at 10%;
- 2 – 10 million rubles at 8%, but 8 million have already been returned;
- 3 - 2 million rubles at 15% with a loan balance of 1.5 million.
The calculation will look like this:
ATP=(15*0.1+8*0.08+1.5*0.15)/(15+8+1.5)*100% =0.097*100%=9.7%, that is, the average is about 10%. Interest rates on loans in foreign currency will be determined similarly, however, when assessing, it is necessary to take into account the exchange rate of the Central Bank of the Russian Federation.
To summarize, it is worth noting that the procedure for calculating the weighted average is quite simple. To do this, you need to know the basic criteria of credit products and be able to use a special formula.
Note to consumers!
- It is important to remember that the weighted average interest rate on loans is by no means constant and, depending on a number of reasons and operations performed, may change its boundaries. Affect a decrease or, on the contrary, an increase in the indicator:
- full repayment of the principal debt;
- the company received another tranche or a new loan;
- one of the loans changed its parameters, and the annual rate also changed.
- In order to fully have information regarding the current affairs of the loan portfolio in one of the banks you have chosen, you should carefully monitor the slightest changes in the weighted average rate.
- There is a common misconception that the weighted average interest rate on loans is falling. Makes the conditions for using lending resources more favorable by improving the financial condition of the entire enterprise. Not at all. Having analyzed all the factors that influence the rate, experts were able to draw up a plan according to which the price for the opportunity to spend the loaned funds tends to a minimum amount. By adhering to the points below, each client can profitably seize the moment and apply for a loan under optimal conditions or transfer an existing lending program in a more comfortable direction.
- enter into agreements under a loan agreement to obtain a loan at the lowest rates;
- the right tactic is to first close debts that were issued at the highest (of all those existing in your name) interest rates;
- if you can’t immediately deal with loans at “expensive” rates, then it is advisable to make attempts to replace (refinance or restructure, for example) them with more favorable conditions;
- reduce or reduce the annual interest rate on current loans (you can get advice from one of the banks, as they often hold similar promotions, especially for clients with a good credit history);
- Clearly and competently plan your schedule of settlement operations for debt repayment in such a way that by the end of the repayment period, you only have those loans that provide minimum rates.
- The weighted average rate on loans is the most complete reflection of the real cost of all resources of a financial organization that issues loans. Most often, it is this value that shows how effectively all employees of the borrowing structure can work, since their immediate responsibilities include the maximum reduction in prices for the opportunity to use the funds of the credit company to attract more clients and increase cash flow.
The value of the weighted average rate in Russia
It is impossible to answer this question unequivocally, since each region operates with its own indicators. In addition, depending on the type of loan issued (mortgage, car loan, consumer purposes), these characteristics also vary.
Why is there a discrepancy? Because each financial institution, based on the rules of its internal policy, sets completely different conditions for loan programs - some increase the rate, some extend the repayment period, and some require mandatory registration of several types of insurance and securing their loan with collateral of existing real estate or other valuables.
In order not to fall into the trap of high interest rates and long delays, you need to prepare and study the information in advance.
Today, the Internet provides an excellent opportunity to get acquainted with all existing banks and their offers. Online calculator in a matter of seconds, it will calculate all the parameters of the desired loan and display all expected payments with an accuracy of the ruble. Based on the average rates for the programs of each bank, you can easily set the weighted average rate (using a formula).
Double taxationDouble taxation is simultaneous taxation on different countries equal income taxes. Double taxation is caused by...
Department of Rosprirodnadzor for Crimean federal district, Kerch Choice of territorial bodyCentral apparatus of Rosprirodnadzor02 Rosprirodnadzor Department for…
