Interest Rate Calculator



 
 

Interest Rate Calculator - Solves For Missing Loan Term

Use this interest rate calculator to solve for any missing loan term. All you need is any 3 of a loan's 4 terms (principal, interest rate, number of payments remaining, or payment amount), and this calculator will find the missing term.

Simply enter the 3 known loan terms in the appropriate entry fields and click on "Calculate" button. One empty field is required for recalculations. When you are done you can print an amortization schedule using the button at the bottom.

No. of Payments Interest Rate Loan Amount Monthly Payment

Different Interest Rates On Different Types Of Loans

Each type of loan has different interest rates. Some loans have higher interest rates compared to others. Typically, credit cards and personal loans bears higher interest rates compared to car and mortgage loans. This is due to several factors based on the characteristic of the loan. These factors include risk, the term of the loan, taxes paid and other expenses that are inherent in the loan. Calculating interest is easy if all the loan details are present, such as the loan amount, interest rate, payment terms and the monthly payment. But the above interest rate calculator will make your calculation much easier since it can calculate the interest even if one loan term is missing.

How Does Risk Affect The Calculation Of Interest?

Have you ever wondered why unsecured loans like personal loans and credit card debts have higher interest rates compared to mortgage and car loans?  The unsecured loans does not have any collateral, thus the risk of the lender of not being paid is higher. For mortgage or car loans, the properties are used as collateral in case the borrower cannot pay. Collaterals reduces the risk of the loan not being paid.

Lower interest rates are also offered to borrowers who have good credit scores. Having a good credit rating simply means that you are good payer based on your loan history. The risk is involved for those with good credit rating are apparently low compared to those with low credit rating. Similarly, government institutions are also offered low interest rates compared to private companies because the lender is assured that the government pays its debts.

Long-Term Versus Short-Term Loans

Short-term loan generally have lower interest rates. If the loan duration is long, the interest rate is also high. Lenders charge higher interest rate since the risk of not getting paid extends for a longer period of time. Another factor affecting the interest rate is the uncertainty of the future economic conditions and the future financial state of the borrower. The lenders also include in their calculation the estimated inflation rate and this causes the interest rates for long-term loans to be higher.

Other Factors Affecting Interest

Special features in your loan could possibly affect the interest rate. For example, if the lender allows you to make extra payments of pay off your loan anytime, this will lessen their chance of earning more, thus they charge more on interest. Also any loan that can be converted to money quickly usually bears lower interest rate.

The available money for borrowing also affects interest rates. If the demand for loan is higher than the supply, the interest rate is high. If there are not much people applying for loan, the interest rate is generally low to attract more borrowers.

The government also dictates the prevailing interest rate based on the economic conditions. The government usually makes an announcement if there are events affecting the interest rates.

Conclusion

Loan interest is the most important factor when taking loan. There are loan interest rates that are simply high without any reason and some lenders charge higher interest rate than the others. Before making a decision, it is important that you understand what are the different types of interest and how it is calculated. The loan interest calculator will help you compare and calculate the interest rate of the loan. You can play around with the calculator even if one loan term is missing. The more you understand about interest, the better decision you make. Remember, our goal is to pay low interest on loans as much as we can.

Interest Rate Calculator Terms and Definitions

  • Principal – The amount borrowed or invested.
  • Annual Interest Rate – The percentage interest rate charged for borrowing money.
  • Term – The time period for which the money is borrowed or deposited.
  • Monthly Payment – The amount of money you pay for your loan each month.
  • Loan – The process of borrowing money from a lender with a promise to return after a certain period of time.
  • Lender – The entity that gives loan.
  • Borrower – The entity that borrows money from the lender.
  • Amortization – The equal amount of money paid for the loan.

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