When you take a Maker loan, you accrue interest on the amount you borrow. The interest rate is a **variable Annual Percentage Rate** (APR). The rate can change depending on the outcome of votes by the Maker community.

When you close your loan, you must pay the accrued interest. If you hold Maker tokens, you can pay with these. Otherwise the interest payment will come out of your collateral.

You can close your loan at any time by repaying the amount you borrowed.

## Example

**Day 1**

**You "lock up" $200 worth of Ether****You borrow $100 worth of DAI at 16% APR**

This means you pay $0.044/day interest *whilst on this rate*.

16% of $100 = $16 per year

$16 / 365 = $0.044 per day

**Day 10: You have accrued $0.44 interest**

Then the interest rate changes to 20%.

20% of $100 = $20 per year

$20 / 365 = $0.055 per day

**Day 20: You have accrued $0.99 interest**

Add the first 10 days at 16%, plus the next 10 days at 20%.

**You close the loan**

You repay the $100 DAI. If you hold Maker tokens, the interest is paid with these.

Otherwise, your collateral is used, so you receive back $199.01 worth ETH. This is the original amount you locked up ($200), minus the interest ($0.99).