About this calculator
The Interest rate Calculator calculates the real interest rate of loans that are fixed in terms of time and in the monthly payments.
What is interest rate?
An interest rate is the percentage rate of money charged or earned over a period of time that is, the cost of money being borrowed or the reward to the money lender. When you loan out money (a loan, mortgage, credit card) the interest rate will tell you how much additional money you will pay the lender; and when you save or invest (a savings account, bond or deposit) what will you get back. Interest rates may be it in a simple annual percentage and are offered in various flavors: fixed (remain the same rate throughout the agreed period) or variable (the rate may change according to the market). Another difference made by economists is between the nominal rate (percentage listed) and the real rate (nominal rate corrected by inflation, demonstrating the change in purchasing power in reality). The rates offered by the lenders depend on aspects such as central bank policy, inflation expectations, the credit risk of the borrower, the term of the loan, and the competition in the market; the actual cost of the borrower is also determined by the frequency of compounding, fees and the manner in which the interest is charged. In practical terms, the awareness of interest rates is used to compare loans and savings: Low rates mean that it costs you less to borrow money, high rates mean that you earn more to save, and every little bit counts in the long run.