Specifically, the interest rate and term of each loan are taken as weights, and the final interest rate is obtained by weighted average. This interest rate reflects the average interest rate of the entire loan portfolio.
For example, if a loan with a term of 1 10,000 yuan is 1 year and the interest rate is 5%, and another loan with a term of 500,000 yuan is 2 years and the interest rate is 6%, then the weighted average interest rate of these two loans is (100× 5%+50× 6%)/(60× 6). The weighted average loan interest rate can be used to measure the financing cost of the whole economy and also to evaluate the loan income level of financial institutions.