The interest rate calculator makes it easy to figure out how much your monthly loan payment will be. If you want to set the EMI to fit your budget, you can change the interest rate to get a number that works for you. Your loan EMI is mainly affected by the interest rate and the length of the loan. Borrowers holding a good credit profile usually get the best interest rates.
The online interest rate calculator helps you figure out how to repay your loan in the time you have. Before applying for a personal loan online, know the personal loan meaning, the exact EMI amount, including personal loan rates, using the interest rate calculator freely available online on instant personal loan apps and websites. Choose the amount you want to borrow, how long you want to borrow it, and the interest rate to determine how much you will have to pay.
- Interest can be either simple or compounded
Interest is an extra fee that is added to the principal loan amount. There are two interest rates when getting a maximum personal loan amount: simple interest and compound interest. Simple interest is a one-time interest rate on the principal amount, meaning interest doesn’t build up over the given period. Interest that is added to the interest from previous periods is called compound interest. Here, people who borrow money must pay interest on both the principal and the interest. Simple interest is based only on the loan’s principal amount. Compound interest, on the other hand, is based on both the principal amount and the interest rate built over time.
If you take out loans with very high-interest rates, compound interest can work against you and put you in debt. The goal is to learn the basics of simple and compound interest rates, which will help you make better financial plans, save money, and increase your net worth over time.
- Interest Rates: Fixed vs Variable
The fixed interest rate doesn’t change during the load period. On the other hand, the variable interest rate, also called the floating rate, changes as the market does. Most of the time, a fixed interest rate is higher than a variable rate. Borrowers with variable interest may see their interest rate go up, but those with fixed interest will not be affected by changes in the market. If the interest rate is low at first but is likely to go up in the future, it is best to lock in a fixed interest rate. Loan calculators let you change the above variables and come up with a good number for the loan EMI and interest.
- Interest Rate Formula
Whether it’s simple interest or compound interest, there are different ways to figure out the rate of interest:
- Simple Interest Rate: P x R x T 100, where P is the loan’s principal, R is the interest rate, and T is the loan’s period in years. Compound Interest Rate: P (1 + r/n) nt, Where P is the principal amount, r is the interest rate per year, n is the number of times interest is added up in a year, and t is the number of years.
Top 10 Advantages of Using an Interest Rate Calculator
- Fixed interest rate investment schemes: If you invest in a fixed income scheme like a fixed deposit, RD, SGB, SSY, etc., you will earn interest based on a fixed interest rate. A interest rate calculator makes it easy to figure out how much your investment will be worth when it comes due.
- Repaying a loan: The interest rate calculator can also help you figure out how much your EMI will be. This helps you ascertain the repayment beforehand to customize your loan plan effectively.
- Earning interest from lending: Let’s say you gave someone money and charged them a fixed interest on the loan. In that case, too, you can use an interest rate calculator to figure out how much the borrower would pay you.
- The interest rate calculator helps you calculate the interest earned or paid on a particular principal amount during a specific period.
- You can easily change or adjust the inputs and get the right results. This will let you compare different options and plan for your finances.
- You can easily compare the different fixed-interest investment plans and choose the best one based on your financial goal.
- Using an interest rate calculator keeps you from having to do complicated math. Everything is easy to figure out and only takes a few seconds.
- Investors and people who borrow money can quickly figure out their interest with the help of an interest rate calculator.
- Calculations are easy and done in real time with no trouble.
- You can do the calculations as many times as you want.