How to calculate interest on loan using Bajaj Finserv interest calculator?
The online monthly interest calculator ensures quick computation of interest and EMIs. Using a Bajaj Finance loan interest rate calculator is simple, with the interface being user-friendly. Here is how to use an interest rate calculator in three simple steps:
Step 1: Enter the loan amount you want to avail.
Step 2: Next, enter the rate of interest on your loan.
Step 3: Select the repayment period you wish to opt for and get accurate results instantly.
Methods of calculating interest
The two primary methods of calculating the interest are simple interest rates and compound interest rates.
Simple interest
Simple Interest is a straightforward calculation where interest is calculated solely on the principal amount.
Here’s the mathematical formula, on which a simple interest calculator works to compute the loan amount:
A = P (1+RT)
To calculate Interest Paid on a loan, the formula is
Interest = A – P.
Where,
A = Total Amount Paid
P = Principal Amount
R = Rate of Interest
T = Number of years
Compound interest
Compound interest, on the other hand, takes into account both the principal and any accumulated interest, resulting in interest being earned on the initial amount as well as on the previously earned interest.
Here’s the mathematical formula, on which a compound interest calculator works to compute the loan amount:
A = P (1 + r/n) ^ nt
To calculate Interest Paid on a loan, the formula is
Interest = A – P.
- A = Total Amount Paid
- P = Principal Amount
- R = Rate of Interest
- N = number of times interest is compounded per year
- T = Number of years
Advantages of using a loan interest rate calculator
Here are some benefits of utilising our interest calculator:
Accuracy:Provides precise calculations for interest and repayments.
Time efficiency:Swiftly generates results, saving time for borrowers.
Financial planning:Assists in planning budgets with accurate repayment estimates.
Comparison tool:Enables easy comparison of loan offers from different lenders.
Cost-effectiveness:Helps borrowers minimize overall borrowing costs.
Informed decisions:Empowers borrowers with information for decision-making.
FAQs
To calculate interest rates, use the formula: Interest = Principal × Rate × Tenure. This equation helps determine the interest rate on investments or loans.
How do I calculate how much interest I will pay on my loan? ›
If you have a 6 percent interest rate and you make monthly payments, you would divide 0.06 by 12 to get 0.005. Multiply that number by your remaining loan balance to find out how much you'll pay in interest that month. If you have a $5,000 loan balance, your first month of interest would be $25.
How do you calculate interest only on a loan? ›
To calculate interest-only loan payments, multiply the loan balance by the annual interest rate, and divide it by the number of payments in a year. For example, interest-only payments on a $50,000 loan with a 4% interest rate and a 10-year repayment term would be $166.67.
How do you calculate effective interest on a loan? ›
The formula for EAR is: EAR = (1 + i/n)^n - 1 where i is the stated interest rate as a decimal and n is the number of interest payments per year. The stated interest rate is typically given as a percentage so remember to divide that percentage by 100 to get the decimal version.
What is the easiest way to calculate interest rate? ›
The formula for calculating simple interest is A = P x R x T.
- A is the amount of interest you'll wind up with.
- P is the principal or initial deposit.
- R is the annual interest rate (shown in decimal format).
- T is the number of years.
For example, the interest on a $30,000, 36-month loan at 6% is $2,856.
How do you calculate real interest on a loan? ›
To calculate a real interest rate, you subtract the inflation rate from the nominal interest rate. In mathematical terms we would phrase it this way: The real interest rate equals the nominal interest rate minus the inflation rate.
How to calculate daily interest on a loan? ›
If you're paying back a credit card bill or looking for the best time to take out a loan, calculating daily interest can give you a better idea of your finances. To calculate daily interest, multiply the balance of your account or principal of the loan by the interest rate or APR, then divide by 365.
What is the simple interest formula for a loan? ›
Simple interest relates not just to certain loans. It's also the type of interest that banks pay customers on their savings accounts. The formula to determine simple interest is an easy one. Just multiply the loan's principal amount by the annual interest rate by the term of the loan in years.
What is the formula for loan payment? ›
Monthly Payment = (P × r) ∕ n
Again, “P” represents your principal amount, and “r” is your APR. However, “n” in this equation is the number of payments you'll make over a year. Now for an example. Let's say you get an interest-only personal loan for $10,000 with an APR of 3.5% and a 60-month repayment term.
the amount so calculated using the simple interest calculator includes the interest amount along with the principal. the formula for calculation: a = p(1 + (r*t)) personal loan calculator: personal loan calculator allows you to calculate your EMI using variables like the amount borrowed, interest rate, and loan tenure.
How to calculate percentage of interest? ›
Formula: Simple Interest (SI) = Principal (P) x Rate (R) x Time (T) / 100. Example: If you invest $1,000 with a 5% annual interest rate for 3 years, you'd earn $150 in simple interest.
What is the formula for effective monthly interest rate? ›
You would need i(12) if you were calculating a(12):<10>, for example, as i(12) appears in the denominator of this annuity factor. If you have an interest rate of i = 10% per annum effective, then if you want the monthly effective interest rate, you use the formula (1+i)^(1/12) - 1.
How do you figure out the real interest rate on loans? ›
A “real interest rate” is an interest rate that has been adjusted for inflation. To calculate a real interest rate, you subtract the inflation rate from the nominal interest rate. In mathematical terms we would phrase it this way: The real interest rate equals the nominal interest rate minus the inflation rate.
How do you calculate effective interest rate online? ›
The formula and calculations are as follows: Effective annual interest rate = ( 1 + ( nominal rate ÷ number of compounding periods ) ) ^ ( number of compounding periods ) - 1. Investment A = ( 1 + ( 10% ÷ 12 ) ) 12 - 1.
