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Is the annual interest rate the same as simple interest?
Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.
What is the Formula for simple interest rate?
The answer for rate in simple interest is =rate= simple interest\principle*time
What is the difference of simple interest and simple discount?
Simple interest refers to interest that is only paid on principal. Simple discount refers to the amount that is deducted from the amount of the loan.
Definition of simple interest?
Simple interest is a term that is used for quickly calculating the interest charge on a loan.
Why does compound interest earn more than simple interest?
With compound interest, in the second and subsequent periods, you are earning interest on the interest earned in previous periods. If you withdraw the interest earned at the end of every period, the two schemes will earn the same amount.
Does the amount of interest earned each year increase decrease or stay the same in a simple interest account What about in a compound interest account?
Simple interest: stays the same. Compound interest: increases.
Does the amount of interest earned each year increase decrease or stay the same in a simple interest account. What about in a compound interest account?
Simple interest: stays the same. Compound interest: increases.
Is the annual interest rate the same as simple interest?
Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.
How do you compare Diminishing Interest to Float Interest?
You have confused between the terms. Simple interest and interest at flat rate is one and the same. The other type of interest is diminishing balance or reducing balance. These are interests associated with loans or finances sought. Well a simple rule of thumb is that usually simple interest rate is about half of rate on reducing balance. For e. g. if rate at reducing balance is 12% then simple interest for the same will be around or just more than 6%
How is a refund calculated on a precomputed loan?
A precomputed account is one in which the debt is expressed as a sum comprising the principal and the amount of the finance charge computed in advance. The total amount of each payment is subtracted from the balance which includes the principal and finance charges (interest). A simple interest (interest bearing) account is one in which the balance includes only the principal amount and the interest calculated from payment date to payment date is subtracted from the total amount of the payment and the remainder of the payment is subtracted from the principal balance. A precomputed account and a simple interest account with the same amount financed or principal balance, the same annual percentage rate and the same terms will have the same finance charge. If both accounts have payments made as contracted for the full term of the obligation, the finance charge will be the same for both accounts. The differences between the two accounts are in how payments to the accounts are actually made during the term. Delinquency Charges: Both types of accounts can have delinquency charges imposed if payments are not received within usually10 days of the date the payment is due. On a simple interest account you will also be paying interest for the days delinquent on a higher balance than the original total finance charge was computed, making you pay more finance charges than originally contracted. If you were over 10 days late in making your payments each month on an account with a $5,000 original unpaid balance with a 21% annual percentage rate for 24 months, you would pay $372.00 in delinquency charges on a precomputed account. You would have paid the $372 00 delinquency charges plus additional interest (finance charges) on any unpaid delinquency charges and the higher principal balance due to the delinquency on a simple interest account. Deferral Charges: Precomputed accounts can have a deferral charge imposed, if contracted for, on payments past due over 10 days. Deferral charges are based on the balance deferred times the annual percentage rate divided by 12. Deferral charges are not allowed on simple interest accounts. However, you would be paying a higher finance charge then originally contracted if your payments were delinquent or the lender allowed you to make an "interest only" payment. As you can see from the example above, being delinquent in your payments can be very costly over the term of an account plus being delinquent is reported on your credit records and future credit may be hard to secure. Prepayments in full: When you prepay a simple interest account , you owe the principal balance plus interest accrued since the previous payment. There is no rebate. When you want to pay off a precomputed account ahead of your contractual obligation, you are entitled to a rebate of the unearned finance charge based on the sum of the balances known as the Rule of 78's. The balance of a precomputed account includes the total finance for the full term of the contract. If it is prepaid in full before the maturity date, the unearned finance charges are subtracted from the balance to arrive at the amount due at time of the prepayment in full. The Rule of 78's is so named because a hypothetical installment account with a term of 12 months has 78 units calculated by adding the numbers 1 plus 2 plus 3 through 12. To compute the Rule of 78's decimal you take the number of months remaining in the term of the contract times that number plus 1. You divide that number by the number of months in the term times the term plus 1. The Rule of 78's decimal is then taken times the finance charge to compute the rebate. EXAMPLE: $5,000.00 amount financed $1,166.32 finance charge 24 payments of $256.93 21% annual percentage rate Date made 1-10-02 First payment due 2-10-02 Date prepaid 11-11-02 There are 11 months earned on the account (the creditor can take a full months earnings for 1 day into the next month in this example) and 13 months unearned. You can compute the rebate as follows: 13 X 14 divided by 24 X 25 = 182 divided by 600 = .3033 Rule of 78's decimal $1,166.32 X .3033 = $353.74 The finance charge rebate would be $353.74. The lender earned 69.67% of the total finance charge during the first 11 months of the 24 month contract. Finance charges earned by the Rule of 78s are the highest for the first months of the term because the balance of the amount financed is highest during that period. You can look at the following chart to see that the earned finance charge would be $812.54 after 11 months. A simple interest account with the same terms which was paid on the contracted due date each month and prepaid on 11/11/00 would have finance charges earned of $737.10, the unearned finance charge would be $429.22 (earning on for 10th month plus one day's interest) which is $75.48 less total finance charges then the precomputed account. If the account had prepaid on 11/10/00 (exactly 10 months), the total finance charge on the precomputed account would have been $758.11 ($1,166.32-408.21). This is still $22.96 more then the simple interest earned finance charge of $735.15 ($1,166.32-431.17). From the examples given, you can see that if you make your payments as contracted each month and prepay your account, a simple interest account will cost you less than a precomputed account. If you do not pay your account in full before the maturity date and pay as contracted for the full term of the account, there would be no difference in the cost between a precomputed account and a simple interest account. On the other hand, if you are constantly delinquent on your payments, a simple interest account will result in higher finance charges. A precomputed account is one in which the debt is expressed as a sum comprising the principal and the amount of the finance charge computed in advance. The total amount of each payment is subtracted from the balance which includes the principal and finance charges (interest). A simple interest (interest bearing) account is one in which the balance includes only the principal amount and the interest calculated from payment date to payment date is subtracted from the total amount of the payment and the remainder of the payment is subtracted from the principal balance. A precomputed account and a simple interest account with the same amount financed or principal balance, the same annual percentage rate and the same terms will have the same finance charge. If both accounts have payments made as contracted for the full term of the obligation, the finance charge will be the same for both accounts. The differences between the two accounts are in how payments to the accounts are actually made during the term. Delinquency Charges: Both types of accounts can have delinquency charges imposed if payments are not received within usually10 days of the date the payment is due. On a simple interest account you will also be paying interest for the days delinquent on a higher balance than the original total finance charge was computed, making you pay more finance charges than originally contracted. If you were over 10 days late in making your payments each month on an account with a $5,000 original unpaid balance with a 21% annual percentage rate for 24 months, you would pay $372.00 in delinquency charges on a precomputed account. You would have paid the $372 00 delinquency charges plus additional interest (finance charges) on any unpaid delinquency charges and the higher principal balance due to the delinquency on a simple interest account. Deferral Charges: Precomputed accounts can have a deferral charge imposed, if contracted for, on payments past due over 10 days. Deferral charges are based on the balance deferred times the annual percentage rate divided by 12. Deferral charges are not allowed on simple interest accounts. However, you would be paying a higher finance charge then originally contracted if your payments were delinquent or the lender allowed you to make an "interest only" payment. As you can see from the example above, being delinquent in your payments can be very costly over the term of an account plus being delinquent is reported on your credit records and future credit may be hard to secure. Prepayments in full: When you prepay a simple interest account , you owe the principal balance plus interest accrued since the previous payment. There is no rebate. When you want to pay off a precomputed account ahead of your contractual obligation, you are entitled to a rebate of the unearned finance charge based on the sum of the balances known as the Rule of 78's. The balance of a precomputed account includes the total finance for the full term of the contract. If it is prepaid in full before the maturity date, the unearned finance charges are subtracted from the balance to arrive at the amount due at time of the prepayment in full. The Rule of 78's is so named because a hypothetical installment account with a term of 12 months has 78 units calculated by adding the numbers 1 plus 2 plus 3 through 12. To compute the Rule of 78's decimal you take the number of months remaining in the term of the contract times that number plus 1. You divide that number by the number of months in the term times the term plus 1. The Rule of 78's decimal is then taken times the finance charge to compute the rebate. EXAMPLE: $5,000.00 amount financed $1,166.32 finance charge 24 payments of $256.93 21% annual percentage rate Date made 1-10-02 First payment due 2-10-02 Date prepaid 11-11-02 There are 11 months earned on the account (the creditor can take a full months earnings for 1 day into the next month in this example) and 13 months unearned. You can compute the rebate as follows: 13 X 14 divided by 24 X 25 = 182 divided by 600 = .3033 Rule of 78's decimal $1,166.32 X .3033 = $353.74 The finance charge rebate would be $353.74. The lender earned 69.67% of the total finance charge during the first 11 months of the 24 month contract. Finance charges earned by the Rule of 78s are the highest for the first months of the term because the balance of the amount financed is highest during that period. You can look at the following chart to see that the earned finance charge would be $812.54 after 11 months. A simple interest account with the same terms which was paid on the contracted due date each month and prepaid on 11/11/00 would have finance charges earned of $737.10, the unearned finance charge would be $429.22 (earning on for 10th month plus one day's interest) which is $75.48 less total finance charges then the precomputed account. If the account had prepaid on 11/10/00 (exactly 10 months), the total finance charge on the precomputed account would have been $758.11 ($1,166.32-408.21). This is still $22.96 more then the simple interest earned finance charge of $735.15 ($1,166.32-431.17). From the examples given, you can see that if you make your payments as contracted each month and prepay your account, a simple interest account will cost you less than a precomputed account. If you do not pay your account in full before the maturity date and pay as contracted for the full term of the account, there would be no difference in the cost between a precomputed account and a simple interest account. On the other hand, if you are constantly delinquent on your payments, a simple interest account will result in higher finance charges.
What is the Formula for simple interest rate?
The answer for rate in simple interest is =rate= simple interest\principle*time
What is the calculation for a simple compound interest rate?
There is simple interest and there is compound interest but this question is the first that I have heard of a simple compound interest.
If you are borrowing which is best simple or compound interest?
If the rate of interest is the same, simple interest benefits the borrower. Compound interest charges (or pays) interest on the accrued interest as well as the principal amount. This is why the APR (annual percentage rate) may differ from the base interest rate on a loan, or on revolving credit balances.
What would be the simple interest if the compound interest on the same sum for 2 years at 4 percent be Rs 408?
Interest = Rs 408 so capital = 5000. So the simple interest would be 5000*4/100*2 = Rs 400.
What makes the simple interest simple?
It is interest on simply the original capital. After the first period, compound interest involves interest on the interest earned in previous periods and soit not simple.
If you have an account with an annual simple interest rate of 2.1 percent. You have a principle of 450.00 calculate your interest and your principle for two years?
18.90 as an interest. and principle wil remain same.
What is the difference of simple interest and simple discount?
Simple interest refers to interest that is only paid on principal. Simple discount refers to the amount that is deducted from the amount of the loan.
