Interest on Afranga loans is calculated based on the outstanding principal, the annual interest rate, and the duration of each installment period. The withholding tax (WHT) is then deducted from the gross interest before it is paid out to the investor.
Gross Interest Formula:
Net Interest (after withholding tax):
- Afranga uses a 365-day year for all interest calculations.
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The interest amount is recalculated for each installment based on the updated outstanding principal and the number of days in the payment period.
You invest in a loan with:
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€1,000 outstanding principal
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14% annual interest rate
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30-day installment duration
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10% withholding tax rate
Step 1: Calculate Gross Interest
Step 2: Calculate Net Interest
So, after the withholding tax is deducted, you would receive €10.36 for that installment.
Where to Find It:
- Visit the Loan Details Page to view the repayment schedule.
- The gross and net interest is shown for each installment.
- You can also see the withholding tax rate in the Key Investment Information Sheet (KIIS).
Actual interest earnings may vary based on rounding and withholding tax deductions. To learn more about withholding tax and how it affects your returns, check out our Withholding Tax article.
Need help interpreting a repayment schedule? Reach out to us anytime at support@afranga.com.