To use this calculator, input the loan amounts and their respective interest rates. The calculator will compute the weighted average interest rate, providing a clear picture of the overall interest burden.
The formula is: (Loan Amount 1 * Interest Rate 1 + Loan Amount 2 * Interest Rate 2 + ...) / Total Loan Amount
Suppose you have two loans: $10,000 at 5% and $20,000 at 7%. The weighted average interest rate is calculated as follows: (10,000 * 0.05 + 20,000 * 0.07) / (10,000 + 20,000) = 6.33%.
Ensure that the total loan amount is not zero to avoid division errors. This tool is ideal for comparing multiple loans to understand the overall interest rate impact.