Are you aware of what interest actually means? Interest is the cost of using someone else’s money. When one borrows money, interest is accrued. When one lends money, lender receives interest, i.e. a percentage of the principal. The percentage of the principal paid over a stated period is known as the interest rate.
A bank deposit wherein money is stored will also earn interest because the bank is paying for its use of the deposited funds. Assets, which are lent with interest, include shares, car purchase, and consumer good bought through hire purchase and so on. Short-term loans, typically those below one year, make use of simple interest method wherein interest is paid on the principal on the due date or bank discount method.
Long-term loans make use of compound interest mode wherein the interest adds up to the principal amount periodically and, therefore, paid on the accumulated value. Approximate monthly repayments that one will need to make on a loan received or mortgage can be calculated using a loan interest calculator. More specific calculators like a car interest calculator or simple interest loan calculator is also available depending on the kind of interest you need to pay.
Interest Calculator: Why you need one?
An interest calculator is useful in calculating how much one is liable to pay against a loan or mortgage taken from a financial institution. A basic calculator can be used for this purpose. In order to calculate your payment amount, what you need to know is the interest rate value, principal value and period of loan.
Next, calculate the total interest accrued. If you have an annual interest rate figure, divide it by 12 and get the monthly value. This will give you an idea of how much more money is needed to cover the outstanding balance. Add the accrued total interest to the principal amount, which would be the total cost of purchase. Calculate the average payment amount by dividing the total cost of purchase by the amount of payments you need to make. You will be able to find interest calculator online to find out information that you need.
How to use Simple Interest calculator
There are several types of interest rate calculators online. One such calculator is the simple interest calculator. As mentioned, simple interest is a quick and easy method of calculating interest charged on a loan and is determined by multiplying the interest rate by the principal by the number of years.
The simple calculator is an online tool that can calculate how much interest will be charged on a principal amount at a certain interest rate based on a period of time. The formula for finding out simple interest is fairly simple. This can be deduced by multiplying principal, tenure and rate of return and dividing it by 100. When you have a simple interest calculator, firstly focus on the loan payment section. Then enter the loan amount. Subsequently, enter the annual interest rate in the simple interest calculator. Also enter the payment term in months. Finally, generate the loan payment amount.
Car Interest calculations
If you are interested in buying a car, then you will need to apply for a loan. When you make repayment for the loan, you will accrue interest as well. You can calculate interest using a car interest calculator. In order to calculate car payment, the ultimate aim would be to generate monthly repayment amounts for the car loan.
Values that you will need are the vehicle value or loan amount, annual interest rate (in the form of a percentage), number of years needed to repay the full loam amount, and any initial deposits or end balloon payments. By entering all these amounts on the car interest calculator, you will get the figure for the car interest owed.
The car interest calculator will also give a breakdown of the payments based on a monthly period. Knowing these kinds of information is extremely important for those planning to buy a vehicle, as it will give an indication of how much money they will need to fork out towards the repayment of the loan.