Interest refers to the amount charged by a lender to a borrower for any form of debt given, generally expressed as a percentage of the principal. It is also known as the cost of borrowing money and can be classified into two:-
It is calculated on the principal amount of the loan.
A = P (1 + rt) or Simple interest = P*r*t
- A = Final amount (P + I)
- P = Initial Principal Amount
- r = Annual Interest Rate
- t = Time Period in years
- n= Number of time periods
Calculate interest for my loan.(link)
It is calculated not just on the basis of the principal amount but also on the accumulated interest of previous periods. It is important to note that the compound interest amount is not the same for all years since the accumulated interest of previous periods is also taken into consideration.
A=P (1+ r/n) nt
At Jisort, we have developed a free interest calculator with formulas and calculations to automatically solve for principal, interest rate, and a number of periods for both simple and compound interest. This will help you forecast and plan with respect to the expected payment plan.