Interest rate calculator is the most important financial tool needed for daily calculations. It doesn’t matter if you get your money, your car or your home loan, you have to calculate the total amount you need to pay. Since the placement of Equal Month or EMIs is more than both properties – principal and interest paid – determining the exact amount you need to pay is important.

INTRODUCTION: Interest Rate Calculator

 Explaining Interest rates in simple words.

“It is a rental or leasing charge to the borrower for the use of credit or asset. They apply to most obtaining or loaning exchanges for example most people acquire cash to buy homes, finance undertakings, etc.

The cash to be reimbursed is generally more than the obtained sum. Since moneylenders require to pay for the loss of utilization of the cash during the credit time frame”. There are many uncontrollable economic factors that can affect the Interest rates :

  • Economic policy
  • Inflation
  • Economic activities
  • Unemployment rate
  • Supply or Demand

However technological advancement has provided us with a tool that is an Interest Rate calculator. That is required for everyday calculations regardless it’s a personal, vehicle, or home loan. Interest Rate Calculator in easy terms helps in determining real interest rates on loans with fixed terms and monthly payments. It provides a platform of the reliable source which helps to stay side by side of the outstanding liabilities.

An interest rate calculator is also a very dynamic bank interest rate calculator. When a credit is availed from a bank it requires to repay the complete loan in time else the CEBIL score will suffer. Even the creditworthiness will also reduce. It is not only just a calculation tool, but it also helps in planning and tracking your EMIs. By identifying priorities to which should be paid early, and which can wait for later in case of multiple loans.

How can interest rates help you?

Here are some of the first benefits offered by Calculator Rate.

  • Such a platform helps you with a reliable source that helps you keep track of your outstanding debts.
  • The tool also has the ability to calculate bank interest rates. If you have repaid a bank loan, you need to repay the loan on time. Otherwise, your CIBIL results suffer and your debt will also decrease.
  • India’s interest rate calculator helps you to plan which EMI is most important and can be expected in the long run.
  • Lastly, interest rates will save you time, eliminate mistakes and help you stay financially secure.
  • Since most loans have long tenures, finding their repayment status is sometimes difficult. That’s why you need to get an interest calculator. Greatw has many financial tools you will find listed at the end of this page.

Interest Rate Calculator is a great tool to save time. Also, eliminate errors and helps to stay on top of one’s current financial situation. As most of the loans has a long-term tenure. To figure out and track their repayment status usually becomes exceedingly difficult. Therefore we need an interest rate calculator to make things easy and smooth.

Understanding Interest Rates better

Few types of Interest rates used  are mentioned below:

  • Simple Interest

It is the simplest type of Interest with a quick and easy method of calculating the interest charged on a loan, its calculation is only based on outstanding principle balance. The simple interest does not rely and increase the loan balance which means the interest to be paid for each monthly payment cannot increase.

Simple Interest=P×I×N

where: P=principle

I=daily interest rate

N=number of days between payments

  • Compound Interest:

Is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.( Source Wikipedia) 

s A = P (1 + r/n) ^ nt

For this formula, P is the principal amount, r is the rate of interest per annum, n denotes the number of times in a year the interest gets compounded, and t denotes the number of years.

John borrowing $100 from the bank for two years at a 10% interest rate. For the first year, we calculate interest as usual.

$100 × 10% = $10

This interest is added to the principal, and the sum becomes John’s required repayment to the bank for that present time. 

$100 + $10 = $110

However, the year ends, and in comes another period. For compounding interest, rather than the original amount, the principal + any interest accumulated since, is used. In John’s case:

$110 × 10% = $11

John’s interest charge at the end of year 2 is $11. This is added to what is owed after year 1:

$110 + $11 = $121

When the loan ends, the bank collects $121 from John instead of $120 if it were calculated using simple interest instead. This is because interest is also earned on interest.

The more frequently interest is compounded within a time period, the higher the interest will be earned on an original principal. The following is a graph from Wikipedia showing just that, a $1,000 investment at various compounding frequencies earning 20% interest.

Understanding EMIs:

fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly instalments are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full

The formula we use to calculate Interest rates and total amount payable in EMIs is

E = P * r * (1+r)^n / ((1+r)^n-1)

In the equation, the following are represented –

EEMI repayable
PPrincipal loan amount
R/rRate of interest applicable
N/nTenure in years

Principal loan amount is the amount borrowed and must be paid back. Applicable Interest Rate means an annual rate equal to 12% prior to any Event of Default, and 24% after the occurrence of any Event of Default, calculated on the basis of a 365-day year and computed using the actual number of days elapsed since the Issue Date or the date on which Interest was most recently paid.

Calculating manually with the use of these formulas at times turns out to be difficult and has more chances of error and mistakes for someone from a non-financial background. To bring ease to this the Interest Rate calculator is designed with simple entries all you have to do is put the value of loan amount, interest rate, and loan tenure. The Interest Rate Calculator will instantly calculate and provide you with the value without any error.

Can I use the interest rate calculator if I take loans from NBFCs?

NBFCs and other financial institutions follow the same principals and equations. You can freely use our calculator even if you take loans from NBFCs.

Asset Management Company
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