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A loan has a 6% annual interest rate. What is the monthly interest rate?

General Mortgage Knowledge · 20% of the SAFE exameasy

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Correct answer: 0.005 (0.5%)

Monthly rate = Annual rate ÷ 12 = 6% ÷ 12 = 0.5% per month = 0.005 as a decimal. This is used in monthly payment calculations.

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