5 Steps to Calculate the Weighted Average Interest Rate

Step 1:

Multiply each loan by its interest rate to obtain the "per loan weight factor".

Example:

• $10,000 * 2.82% = 282
• $5,000 * 3.42% = 171

Step 2:

Add the per loan weight factors together.

Example:

• 282 + 171 = 453

Step 3:

Add the loan amounts together.

Example:

• $10,000 + $5,000 = $15,000

Step 4:

Divide the "total per loan weight factor" by the total loan amount and then multiply by 100. This will give you the actual interest rate.

Example:

• 453 / $15,000 = 3.02%

Step 5:

Then round to the next nearest 1/8%.

Example:

• 3.02% to nearest 1/8% = 3.125%

Your estimated consolidation interest rate would then be 3.125% before discounts and borrower benefits.