Interest rate calculator
The Invezz interest rate calculator lets you find out the overall and monthly interest amounts of a loan, and also helps you work out the amount of interest you will gain on your savings over time. This means you can keep track of your savings and debts and plan your financial future. Keep reading to see how our interest rate calculator works and how it can help you.
How to use our interest rate calculator
To use our interest rate calculator, follow these steps:
- Enter the initial amount of money (either an amount you have loaned or an amount you’ve saved).
- Enter either the final value or the interest rate applying over time.
- Enter the time you want to measure (e.g. the term of the loan or the period you plan to save for).
- Enter the currency you’re using.
- Click calculate to see the interest accrued over time.
How the interest rate calculator works
The Invezz interest rate calculator takes certain available pieces of financial information and translates that information to show the interest rate applying over time on a sum of money.
For instance, lets say you wanted to find out how much interest an initial sum of £20,000 would accrue over 5 years if left in a savings account with an interest rate of 3%. The calculator would take this data, figure out the maths as the interest rate compounds over time, and let you know instantly that this sum would generate £3,232.34 over the 5 year period.
Why should I use it?
You should use our interest rate calculator when you want to figure out the amount of interest you’re gaining in savings, or paying on a loan over time. This can help you better plan your personal finances.
For instance, when a car dealer tells you the total price of the car and the amount of your monthly payments, but not the interest rate that you’ll actually be paying, you won’t know exactly how much extra you’ll pay for the car overall. This means you won’t know if you’re being offered a better deal than the loan offer you received on a differently priced car at the dealership next door.
What is interest?
Interest is the percentage by which an amount of money increases over time. The idea behind interest payments is to give a lender an incentive to hand out money for a loan, and to encourage people to save money so that institutions such as banks can use the funds to invest and make a profit.
From the borrower’s perspective, making smaller payments and adding in a little interest can be a far more manageable proposition than having to come with a massive sum of money to pay for a big-ticket item like a house or a car.