How Personal Loan Interest Rate Calculator Are Calculated?

A personal loan is a credit amount sanctioned based on an interest rate that is to be paid till the loan tenure ends. The interest rate on a personal loan is determined by three major factors inclusive of credit history, monthly income, and repayment capacity. Borrowers holding a good credit profile usually get the best interest rates. A loan amount becomes heavier to repay by adding a percentage of interest. Hence, it is advisable to get a clear idea about the interest payable so that the loan amount taken doesn’t seem like a burden at a later stage.

Calculating interest is not a tedious task anymore, all thanks to the instant loan apps available for loan applications digitally. The interest rate charged may be fixed or floating, depending upon the loan type you have applied. Use the interest rate calculator to easily calculate the interest in no time or go the manual way using the below simple interest formula:

Principal Loan Amount X Interest Rate X Total Number of Years = Interest

INR 2,00,000 x 5% x 5 = 50,000 is the interest for 5 years

Interest rate calculator helps in the instant calculation of monthly instalments on your loan. This makes it easy to plan the repayment better.

Interest Rate Formula, There are different formulas applied to determine a rate of interest whether it is simple interest or compound interest:

Simple Interest Rate

P x R x T ÷ 100, where P = Principal, R = Rate of Interest, and T = Time Period of the Loan in years.

Compound Interest Rate

P (1 + r/n) ^ nt
P is the principal amount, r is the rate of interest per annum, n denotes the number of times in a year the interest gets compounded, and t denotes the number of years.