How to calculate the average interest rate on a loan when combined?

For example, suppose you have three loans with interest rates of these three different ...
  • $ 19,000.00 4.00%
  • $ 10,000.00 3.75%
  • $ 12,134.00 10.00%
What is the average interest rate when combined?

Well, an average rate of interest would be added together and divided by three, which would be 5.91%. However, it also should take into account the amounts to be paid.

If you are trying to pay down loans and get out of debt, the rate of an "average " of interest is totally useless. You need to pay higher debt interest rate (the loan of 10%) as a priority, while the minimum payments to others, and then when it's gone, that 4% of debts is the priority.

I would say its average interest rate, taking into account the amounts to be paid in relation to others, would be 5.71%. But of course, this average could be significantly reduced if they just pay up 10% of the loan is not costing you a fortune.


... 19.000 x 0.0400 = ______
+ 10 000 x 0.0375 = ______
+ 12,134 x.1000 = _______

now divide the total interest payable by the sum of the amounts borrowed, and should be the mean (until you pay part of the debt)

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