# Interest Calculation

Let's start with a loan:**Loan Example**

On February 1, you borrow $1,000 to put towards a new computer.

The credit union gives you a $1,000 loan at 5.00% APR

You will make 12 monthly payments of $85.61

Your first payment will be on February 25 - 25 days after you get the loan.

**1,000**divided by

**12**is

**$83.33**, so why is the payment

**$85.61**? Let's figure it out!