# 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:

## 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:

## 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 1.05^{4} = $121.55

Try it yourself:

## 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):

## 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

Stuarton 03 Dec 2019:Hello, I really like how your plugin looks with the slider styling!

I need to create a loan calculator which can:

1. Have a toggle to calculate payment in advance or in arrears

2. Have an option for a residual payment as a percentage of the loan amount

Can this be done?

Grahamon 03 Dec 2019:Hi Stuart,

1. This could be added

2. This can be done

Both of these would need to be paid for (as are all other customisations). I’ve sent you an email with costings.

Heinon 28 Nov 2019:I have the same request as Alan, please Graham

“can you confirm if a 0% option is possible? I’m the free version, but before I buy the pro, can you confirm? Currently, it defaults doesn’t display any results when setting to 0 and then defaults to 2 at next save.”

Grahamon 28 Nov 2019:I’m working on a fix for this right now.

Grahamon 01 Dec 2019:Please download an install this update and let me know if it works: https://loanpaymentplugin.com/qis-update/

Alanon 15 Nov 2019:can you confirm if a 0% option is possible? I’m the free version, but before i buy the pro, can you confirm? Currently it defaults doesn’t display any results when set to 0 and then defaults to 2 at next save.

Grahamon 18 Nov 2019:Alan,

I can add a filter so you can do this. I will email you when I’ve made the change.

Grahamon 01 Dec 2019:Please download an install this update and let me know if it works: https://loanpaymentplugin.com/qis-update/

Nick Banduchon 18 Oct 2019:Hi, can we do interest free using the Loan Payment plugin?

Grahamon 19 Oct 2019:Hi Nick,

It should work if you set an interest rate of zero. If not, try this version: https://loanpaymentplugin.com/qis-update/

Bhanu Pratapon 26 May 2019:Hi Graham,

I see, It appears you have fixed compound interest issue on this page. Please tell me how can I fix it in my website. It still gives £NaN output.

Grahamon 26 May 2019:Download from here: https://loanpaymentplugin.com/qis-update/

Please let me know if it all works so I can upload to the WordPress plugin repository

Bhanu Pratapon 23 May 2019:Hi Graham,

I see Compound Interest is not giving the output. It gives £NaN. In my website also it gives £NaN.

Please resolve.

Thanks

Bhanu

Grahamon 23 May 2019:I saw this earlier today. I’m looking for a fix and will upload once it’s done.

Dacoon 19 Jan 2019:How do you use this to calculate monthly interest rates.

e.g. 10% per month ?

Grahamon 19 Jan 2019:Hi Daco,

Make sure the period is set to months and uncheck the ‘Force APR’ box.

Philon 22 Nov 2018:If I compare the Simple interest against the Excel PMT function https://exceljet.net/formula/calculate-payment-for-a-loan I get different results. My test is £2000 over 10 years at 5.9% APR. I get £26.50 a month compared to Excel of £22.10. Also the APR checkbox doesnt seem to make any difference!

Grahamon 22 Nov 2018:Phil,

The excel PMT function isn’t simple interest, it uses amortisation. Simple interest is calculated like this:

Total = 2000 x (1 + (0.059 x 10)) = 3180

Monthly Repayment = 3180 / 120 = 26.50

https://loanpaymentplugin.com/features/interest-calculations/

Davidon 28 Sep 2018:Hi,

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

Thanks for your help,

Best regards

David

Davidon 28 Sep 2018: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/

Grahamon 28 Sep 2018:David,

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

David Pocheton 24 Sep 2018: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

Grahamon 24 Sep 2018: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%

Gabrielon 11 Sep 2018: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!

Grahamon 11 Sep 2018: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.

Uchenna Igweon 30 May 2018: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

Grahamon 30 May 2018: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.