A ৳10,000 loan with a 12.5% service charge repaid in 46 weekly instalments means ৳244.57 a week and a true rate of about 26.6% a year on a declining-balance basis. Compulsory weekly savings push the real cost higher.
৳
= 10 thousand taka
%
Instalments
৳
0 if none. Assumed returned at the end of the loan.
%
True yearly rate
26.6%
Effective rate with compounding 30.4%
Each instalment
৳244.57
Service charge
৳1,250
Total instalments
৳11,250
Regulator’s maximum
24% declining balance — this loan is above the cap
A ৳10,000 loan with a 12.5% service charge repaid in 46 weekly instalments costs about 26.6% a year on a declining-balance basis.
The cap is being re-verified — check the latest rule on the MRA website.
Enter the flat service charge quoted on the whole loan, e.g. 12.5.
Choose weekly, monthly or daily instalments and enter how many.
If you must save with each instalment, enter that amount and any profit paid on it.
See the true yearly rate, the instalment and how it compares with the regulator's cap.
Formula
Service charge = loan × flat rate
Each instalment = (loan + service charge) ÷ number of instalments
True yearly rate = the per-instalment rate r at which the present value of all instalments (and returned savings) equals the loan, then r × instalments per year
Examples (৳10,000 loan)
Terms
Instalment
True yearly rate
10% flat, 50 weekly
৳220
19.8%
12.5% flat, 46 weekly
৳244.57
26.6%
12.5% flat, 46 weekly + ৳50/week savings
৳294.57
33.0%
12.5% flat, 46 weekly + ৳100/week savings
৳344.57
42.6%
12% flat, 12 monthly
৳933.33
21.5%
10% flat, 100 daily
৳110
70.1%
Good to know
Flat vs declining: banks and the regulator state caps on a declining balance; NGOs usually quote a flat charge. This true rate lets you compare them.
Savings: ask in writing when savings are returned and what profit they earn.
Other costs: admission, insurance or passbook fees raise the real cost further and are not included here.
More: why a flat charge is nearly double in real terms
Take ৳10,000 at a 12.5% charge, ৳1,250. You start repaying in the first week, so halfway through the year you hold only about half the money, yet the charge was set on the full ৳10,000. Measured against the money you actually hold, the rate nearly doubles.
Compulsory savings raise it further: you pay them every week but they don’t reduce the loan.
Many people avoid interest for religious reasons. This calculator does not encourage borrowing; it only makes the real cost clear.
Frequently asked questions
Is a 12.5% service charge 12.5% interest a year?
No. The charge is on the whole loan, but you repay part of it every week, so on average you hold only about half. 12.5% flat over 46 weekly instalments equals about 26.6% a year on a declining balance.
How do compulsory savings change the real rate?
Savings don't repay the loan; they come back at the end, so you effectively have less money in hand. On ৳10,000 at 12.5% with ৳50 a week saved (no profit) the true rate is about 33%, with ৳100 a week about 42.6%.
What is the maximum microfinance service charge?
The Microcredit Regulatory Authority (MRA) is last reported to cap licensed institutions at 24% a year on a declining balance. The cap is reviewed regularly, so check the current rule on the MRA website.
How is the true yearly rate calculated?
From the money flows: the loan you receive, each instalment you pay and the savings returned at the end. We find the per-instalment rate at which all payments are worth exactly the loan (internal rate of return, IRR) and multiply by the instalments per year.
What about daily instalment loans?
Borrowing ৳10,000 and paying ৳110 a day for 100 days totals ৳11,000, which sounds like 10%. The true yearly rate is about 70%. Choose daily instalments and enter 100 to see it.
What are cheaper alternatives?
Bank agricultural loans for farmers, and lower-rate government and cooperative schemes. Compare the true yearly rate of a few lenders here before deciding.