# Calculating Payable Amount for a Short-Term Loan Product

## Using an Annualized Interest Rate - a 25% for 6 Weeks example

If you’re a lender offering short-term loans, you’ve probably dealt with **Flat Interest Loans** that run for just a few weeks.  
Let’s say you want to create a loan product that charges a **25% flat interest rate for 6 weeks**; how do you configure it correctly for your client?

Here’s a quick guide 👇

### Step 1: Convert 6 Weeks into a Year Fraction

There are **52 weeks in a year**.  
To find out how many 6-week periods fit into one year:

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<div data-node-type="callout-emoji">ℹ</div>
<div data-node-type="callout-text">Number&nbsp;of&nbsp;6-week&nbsp;periods&nbsp;in&nbsp;a&nbsp;<code>year = 52.2/6​ ≈ 8.70</code> This means that a 6-week loan can, in theory, repeat about <strong>8.70</strong> times per year.</div>
</div>

### Step 2: Calculate the Simple Annualized Rate

If the loan is **not compounded** (i.e., interest isn’t charged on previous interest), we can scale it linearly:

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<div data-node-type="callout-emoji">💡</div>
<div data-node-type="callout-text">Annual&nbsp;interest&nbsp;<code>rate = 25% × 8.70 = 217.50%</code> So, the simple annualized interest rate for a loan at 25% over 6 weeks is <strong>217.50%</strong> per year.</div>
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See the two Examples Below

![](https://cdn.hashnode.com/res/hashnode/image/upload/v1760532362032/2356dde8-b161-48ae-a968-729df50d634e.png align="center")

### Step 3: Configure It in Cladfy Microlender

Add a new **Loan Product** in your Cladfy Microlender dashboard with the sample format below:

| **Field** | **Example Input** |
| --- | --- |
| **Loan Name** | Duka Loan (6 Weeks) |
| **Interest Type** | Flat |
| **Interest Rate** | 25% |
| **\*Annual** **Interest Rate** | 217.50% |
| **Interest Period** | 6 Weeks |
| **Compounding** | None (for flat rate loans) |
| **Loan Term Options** | 6 Weeks |
| **Status** | Active |

*Once you save the product, Microlender automatically applies the correct interest calculations, repayment schedule, and reporting metrics.*

### Why This Matters

This understanding is critical for:

* **Lenders**, to maintain transparency and accurate reporting.
    
* **Borrowers**, to make informed financial decisions.
    

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