An interest rate is a percentage that you are charged for borrowing money, expressed as a percentage of the total amount of the loan or the principal.

**Formula to calculate interest rate.**

Time refers to the time taken to pay off the loan.

Interest Rate (R) is usually in decimal form, to get the percentage, we have to multiply it by 100.

**Example:**

When paying off a loan of $1,000 after a period of one year, an individual was asked to pay $100 as interest. Calculate the interest rate of the lending institution.

Therefore, the interest rate of the lending institution is 10 %.