What is Interest Calculation?

Interest calculation is an important thing to be aware of. Why? Because you can’t avoid interest one way or the other. Interest is both relevant to the money you have left in the bank, ie your wealth, but also if you want to take out a loan. Interest rate calculation is important in both cases, as it is a method of examining the size of a savings or loan over time.

Interest versus time

Interest versus time

The value of a savings or loan depends not only on the amount of money, but also to a large extent on interest accrual. Time plays an important role in that embrace. That’s because money doesn’t have the same value in 10 years as they have today. Interest calculations are therefore relevant in order to find the real value of money.

There are several ways to do interest calculations. This is because there are several different rewrites of the formula, which include, for example, interest rates. The classic formula for interest calculation typically looks like this:

Kn = K0 (1 + r) ^ n

When calculating interest rates, the interest rate is typically referred to per years, or pro anno, which is the reason for the close link between interest rates and time. However, the interest is not attributed per year, but per term, why interest accrual can be made several times a year. It is therefore important to distinguish between the interest rate per year and term.

You may have an annual interest rate of, say, 6%, but which is spread over 1, 2, 4 or 12 installments. The number of interest accruals also affects the total cost of the loan, as interest is added to the interest rate when accruing interest.

Interest Calculation on Hipoone Loans

Interest Calculation on Pantaloon Loans

There are two key reasons why you should not worry about interest rates when you borrow from us. One is that interest rates are not attributed to our loans.

The second reason is that on our site we have incorporated a loan calculator that in a few seconds will do the interest calculation for you. All you have to do is adjust the loan amount and maturity, and then you will gain an insight into how these two factors are mutually dependent. We have therefore eliminated the risk of unpleasant surprises that may occur if you have made interest calculations different from us, or have calculated incorrectly.

Since interest rate calculation is a difficult size, the loan calculator is an important element that helps to increase the transparency of our loans. It is thus one of the reasons why we are currently offering one of the market’s best and cheapest short-term consumer loans.

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