How to use the Bajaj Finance Interest Calculator?
The online monthly interest calculator ensures quick computation of interest and EMIs. Using a Bajaj Finance loan interest rate calculator is simple, with the interface being user-friendly. Here is how to use an interest rate calculator in three simple steps:
Step 1: Enter the loan amount you want to avail.
Step 2: Next, enter the rate of interest on your loan.
Step 3: Select the repayment period you wish to opt for and get accurate results instantly.
The formula for interest calculation
EMI is calculated using the below formula: -
EMI = P x R x (1+R)^N / [(1+R)^N-1]
Here,
P – Principal loan amount
R - Rate of interest (monthly)
N – Tenure (months)
Example of interest calculation for a loan
Read on to understand the working of our interest calculator. For instance, Riya took a personal loan of Rs. 1,00,000 at an interest rate of 15% p.a. for a tenure of 12 months. Here, Riya’s annual interest payable will be around Rs. 8,310, and her monthly EMI will be around Rs. 9,026.
Methods of calculating interest
The two primary methods of calculating the interest are simple interest rates and compound interest rates.
Simple interest
Simple Interest is a straightforward calculation where interest is calculated solely on the principal amount.
Here’s the mathematical formula, on which a simple interest calculator works to compute the loan amount:
A = P (1+RT)
To calculate Interest Paid on a loan, the formula is
Interest = A – P.
Where,
A = Total Amount Paid
P = Principal Amount
R = Rate of Interest
T = Number of years
Compound interest
Compound interest, on the other hand, takes into account both the principal and any accumulated interest, resulting in interest being earned on the initial amount as well as on the previously earned interest.
Here’s the mathematical formula, on which a compound interest calculator works to compute the loan amount:
A = P (1 + r/n) ^ nt
To calculate Interest Paid on a loan, the formula is
Interest = A – P.
- A = Total Amount Paid
- P = Principal Amount
- R = Rate of Interest
- N = number of times interest is compounded per year
- T = Number of years
Advantages of using a loan interest rate calculator
Here are some benefits of utilising our interest calculator:
Accuracy:Provides precise calculations for interest and repayments.
Time efficiency:Swiftly generates results, saving time for borrowers.
Financial planning:Assists in planning budgets with accurate repayment estimates.
Comparison tool:Enables easy comparison of loan offers from different lenders.
Cost-effectiveness:Helps borrowers minimize overall borrowing costs.
Informed decisions:Empowers borrowers with information for decision-making.
