ATB Blended Rate Calculator

Blended Rate Formula:

\[ \text{Blended Rate} = \frac{(\text{Amount1} \times r1 + \text{Amount2} \times r2)}{(\text{Amount1} + \text{Amount2})} \]

Amount1:

CAD

Rate1 (r1):

decimal

Amount2:

CAD

Rate2 (r2):

decimal

Blended Rate:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the ATB Blended Rate?

The ATB (Alberta Treasury Branches) blended rate is used to calculate the combined interest rate when you have two different loan amounts with different interest rates. This helps determine the effective interest rate across the total borrowed amount.

2. How Does the Calculator Work?

The calculator uses the blended rate formula:

\[ \text{Blended Rate} = \frac{(\text{Amount1} \times r1 + \text{Amount2} \times r2)}{(\text{Amount1} + \text{Amount2})} \]

Where:

\( Amount1 \) — First loan amount in CAD
\( r1 \) — First interest rate (in decimal form)
\( Amount2 \) — Second loan amount in CAD
\( r2 \) — Second interest rate (in decimal form)

Explanation: The formula calculates a weighted average of the two interest rates based on their respective loan amounts.

3. Importance of Blended Rate Calculation

Details: Calculating the blended rate helps borrowers understand their true cost of borrowing when combining loans with different rates, allowing for better financial planning and comparison of loan options.

4. Using the Calculator

Tips: Enter both loan amounts in CAD and their corresponding interest rates in decimal form (e.g., 5% = 0.05). All values must be non-negative, and the total amount must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: Why use a blended rate?
A: A blended rate gives you a single effective interest rate that represents the combined cost of multiple loans, making it easier to compare with other loan options.

Q2: How do I convert percentage rates to decimals?
A: Divide the percentage by 100 (e.g., 7.5% = 0.075).

Q3: Can I use this for more than two loans?
A: This calculator handles two loans. For more loans, you would extend the formula by adding more (Amount × Rate) terms in the numerator and more Amount terms in the denominator.

Q4: Does this account for different loan terms?
A: No, this assumes the loans have the same term. For loans with different terms, a more complex calculation would be needed.

Q5: Is this calculation specific to ATB?
A: While commonly used by ATB, this blended rate calculation is a standard financial formula used by many institutions.