Interest Calculations

Interest is calculated in a number of different ways. The four used by this plugin are: fixed, simple, compound and amortization.

Note: there are other ways of calculating interest and repayments. If the way you want to do it isn’t listed get in contact.

Variables Used

Principle = The amount you want to borrow

Interest = The percentage divided by 100. for example: 2% = 2/100

Term = the number of periods to which the Interest Rate applies. For example: 5 years or 28 days

Fixed Interest

This is the simplest one of all. The formula is:

Total to Pay = Principle x (1 + Interest)

For example: a loan of $100 with an interest rate of 5% returns:

$100 x (1 + 0.05) = $100 x 1.05 = $105

It doesn’t matter how long the loan is taken out for, the interest is always the same.

Try It Yourself:

£100     £1000
1 year     10 years
Monthly repayment is at interest
Total you will Pay:
Loading

Simple Interest

This interest calculation takes into account the time over which the loan is taken. The formula is:

Total to Pay = Principle x (1 + Interest x Term)

For example: a loan of $100 with an annual interest rate of 5% for 4 years returns:

$100 x (1 + 0.05 x 4) = $100 x 1.20 = $120

Try it yourself:

£100     £1000
1 year     10 years
Monthly repayment is at interest
Total you will Pay:
Loading

Compound Interest

This interest calculation uses the previous total to calculate the new total over the term of the loan.

Total to Pay = Principle x (1 + Interest)Term

For example: a loan of $100 with an annual interest rate of 5% for 4 years returns:

$100 x (1 + 0.05)4 = $100 x 1.054 = $121.55

Try it yourself:

£100     £1000
1 year     10 years
Monthly repayment is at interest
Total you will Pay:
Loading

Amortization

This is used to calculated repayments where the amount of interest reduces as the loan is repaid.

Payment = rate(Present Value) / 1 – (1 + rate)-number of periods

This is further complicated by the difference between the USA and how the rest of the world calculate the rate. More about amortization repayments

Try it yourself (this example uses the US formula):

£100     £1000
1 year     10 years
Monthly repayment is at interest
Total you will Pay:
Loading

Repayments

To calculate the repayments on fixed, simple and compound interest all you have to do is divide the total to pay by the number of repayments.

So for example, a 4 year Loan repaid monthly would have 48 payments.

Amortization works differently. More about amortization repayments

Need help? Ask here

  1. David said:

    Hi,

    I found how to do with filling repayments by 12 instead of 1.

    Thanks for your help,

    Best regards

    David

  2. David said:

    Hello Graham,

    Thanks for your answer.
    Yes we have put a point and not a comma but we don’t have this result.
    What we need to put as values in your plugin to have 3 rates : 5,9%, 7,9% and 9,9% and to have the right calculation method?

    You can see examples of what we want as formula here and tell us if your locan calculator can do that:
    https://credit-populaire-leman.ch/

    • Graham said:

      David,
      Change the interest type to amortisation. When I did this I got exactly the same results as the example site.

  3. David Pochet said:

    Hi,
    We have installed your plugin on our website : http://www.acfservices.ch
    But there’s a problem with the calculation system. Indeed, we use this formula :
    https://www.finanzen-rechner.net/kredit/monatsrate-berechnen.html

    For examples :
    The loans are > 10’000 CHF on 12 MONTHS : we have currently CHF899.17 per months so CHF10 790 for 12 months.
    But we should have 868.15CHF per month so 10’417.80 for 12 months.

    For 24’000 on 48 months we currently have : CHF539.50 per month so 25’896 CHF for 48 months
    We normally should have 581.70CHF per month so 27’921,6 CHF for 48 months.

    Can you help me ?

    Best regards,

    David

    • Graham said:

      Hallo David,
      I can look at this for you but I’ve just compared this calculator with my calculator and get the same results on both 9ti within a few cents). Are you using a period or a comma for decimals? The plugin expects 6.9% not 6,9%

  4. Gabriel said:

    Hello,

    I’m trying to configure it to be correct in Brazil, we use the: French System of Amortization (Price Table)
    Is it possible to configure this way?
    I did a test, and see, 20,000 in 24 months from 1433 a month with interest of 3%
    http://prntscr.com/kt57bi
    Similarly in an Excel configured in the Price Table, gave the following:
    https://prnt.sc/kt57lt

    If you want to download the Excel file, I uploaded it to the library of our site: http://cidademotors.com.br/tabela_price_clubedospoupadores/

    Thank you!

    • Graham said:

      Hi Gabriel,
      If you can give me the formula used to calculate the repayments I can investigate why there is a difference. The plugin uses the standard formula (see here) and was taken from the Wikipedia Page.

  5. Uchenna Igwe said:

    Hello, I just started using your plugin but seems I am not able to properly configure it. The lender takes aflat rate of 20% per month on the loan. For eg, a loan of 100,000 will pay 20,000 per month. Somehow I can’t seem to configure it correctly. Kindly assist. Thanks

    • Graham said:

      Hi Uchenna,
      Have you set the period to months? If not you need to change to an annual interest rate of 240%. Send me a link to your calculator page so I can take a look.

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