Understanding and your finances is made easier by knowing how to convert decimals to percentages and vice versa. You need to understand how decimals and percents relate, whether you are using a calculator or a spreadsheet to model your car loan.
Divide by 100
The majority of interest rate is quoted and advertised as a percentage. If you wish to perform calculations with these numbers, then you will need to convert them into decimal form. To do this, divide the number by 100. 1
You can do quick calculations using search engines like Google or Bing, but you can also use your favorite calculator application if you’d prefer. Type the expression that you want to solve in the search box. For example, type in “75/100.”2
The Decimal Point is Moved to the Left
Note:
Imagine that the decimal is at the right-hand side of the number, or the far end. If it helps, imagine that the decimal comes after two zeros (so 75 would be 75.00).
You will be able do it in your head instantly after you have done it several times.
You’ll only need to move the decimal two places for more complex numbers. Here are some more examples:
- 100% = 1
- 150% = 1.5
- 75.435% = .75435
- .5% = .005
Example of APY Earnings
Assume that your bank offers a savings account with an annual percentage yield of 1.25%. What will you earn if you put $100 in a savings account for a year?
Calculate the interest rate by converting it to decimal form and multiplying the result with the deposit amount.
1.25 / 100 = .0125
.125 * $100 = $1.25
For every $100 you deposit, you’ll receive $1.25 annually.
Note:
When using a search engine or spreadsheet, multiply the numbers by an asterisk symbol (or *).
Examples: Purchase Discounts
Say you’re looking to purchase an item that costs $50, but is on sale for 30% off. What would you be able to save and what would the item cost?
30 / 100 = .30
.30 * $45 = $13.50 (savings)
45 – $13.50 = $31.50 (sale price)
Save $13.50 and pay only $31.50 for the item.
Converting decimals to percentages
If you want to convert a decimal number to percentage, what do you do? You might guess that you should do the reverse of what you just did.
Multiply 100
Multiplying a decimal number by 100 is a simple way to do this.
Exemple: To convert.75 into a percentage, multiplied it by 100.
0.75 * 100 = 100%
The Decimal Point is Moved to the Right
The decimal point can be moved two spaces to the right to convert the format from decimal to percent.
Example To convert.75 into a percentage, place the decimal after the 5.75 = 75%
The Big Picture
This financial calculation can be useful to make quick and big-picture assessments.
It is possible to convert a percentage into a decimal by using the above methods. However, it is important to understand what you should do with this number once it has been converted. This example illustrates how simple dollar calculations can be misleading.
Imagine you will borrow $100,000 for a 30-year home loan with an interest rate of 6% annually. How much interest will you pay each year?
You can get an approximate answer by converting the interest rate into decimal format, and then multiplying the result with the amount borrowed:
6 / 100 = 0.06
0.06 * $100,000 = $6,000
For most fixed-rate mortgages, the real answer would be $5,966.59 in the first year.
Standard auto and home loans are usually paid off over time with regular monthly payments. Each payment has a part that reduces the loan balance and a remainder that covers the interest costs.
You will only owe $100,000 for a short time, the first month. You’ll then owe less money each month and your interest charges will drop accordingly. This process is known as amortization. 5
Note:
You can use to create an amortization chart to calculate the exact interest on a loan.
FAQs (Frequently Asked Questions)
How can you convert a fraction into a percentage?
Divide the number at the top by the number at the bottom to convert a fraction into a percent. Then, you can move the decimal to the right two numbers and convert it into a percentage. As an example, 3/4 is 3 / 4, which equals 0.75 or 75%.
How can you round up a decimal number to the nearest 10th percent?
In decimal form, a tenth percent is 0.001. You can round a decimal number that has more than 3 numbers. Look at the 4th number (100th of a percentage) to do this. If the number is greater than five, you should round up to a tenth percent. If the number is less than four, you can round it down and leave the tenth as is. For example, 0.0015 becomes 0.002, while 0.0014 becomes 0.001.
