Identify the loan principal
Determine the interest rate
Determine the interest period
Convert the annual rate to the correct period rate
Use simple interest formula: Interest = Principal × Rate × Time
Use amortized loan formula if the loan has scheduled payments
Calculate daily interest if the loan accrues daily
Multiply the daily interest by the number of days in the period
Subtract any principal paid to find remaining balance
Recalculate interest on the updated balance for the next period