Calculate Equivalent Loan Rate: $1,598 @ 6.8% & $6,680 @ 3.8%

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SUMMARY

The discussion confirms the calculation of an equivalent single loan rate for two student loans: $1,598 at 6.8% F-APR and $6,680 at 3.8% F-APR. The correct equivalent loan amount is $8,278 with an interest rate of 4.38% F-APR. This result is achieved by applying a weighted average of the interest rates based on the principal amounts of the loans. The methodology used is accurate and reflects standard practices in loan consolidation calculations.

PREREQUISITES
  • Understanding of weighted averages in finance
  • Familiarity with loan terms such as F-APR (Fixed Annual Percentage Rate)
  • Basic knowledge of loan consolidation principles
  • Ability to perform arithmetic calculations involving percentages
NEXT STEPS
  • Research how to calculate weighted averages in financial contexts
  • Learn about loan consolidation options and their implications
  • Explore the impact of different interest rates on loan repayment
  • Investigate financial calculators that assist in loan comparisons
USEFUL FOR

Students managing multiple loans, financial analysts, and anyone involved in personal finance or loan consolidation strategies.

KingNothing
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Hi guys, it's 3 AM so don't judge me. I'm doing some accounting work with my student loans and I want you to confirm something for me:

If I have two loans:
$1,598 @ 6.8% F-APR
$6,680 @ 3.8% F-APR

Then the 'equivalent' single loan would be:
$8,278 @ 4.38% F-APR

Correct? I used a weighted average of the interest rates, using the principal amount as the weight.
 
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