:root {
–primary-blue: #004a99;
–success-green: #28a745;
–light-background: #f8f9fa;
–dark-text: #333;
–border-color: #ddd;
}
body {
font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif;
background-color: var(–light-background);
color: var(–dark-text);
line-height: 1.6;
margin: 0;
padding: 20px;
}
.loan-calc-container {
max-width: 800px;
margin: 20px auto;
background-color: #fff;
padding: 30px;
border-radius: 8px;
box-shadow: 0 4px 15px rgba(0, 0, 0, 0.1);
}
h1, h2 {
color: var(–primary-blue);
text-align: center;
margin-bottom: 25px;
}
.input-group {
margin-bottom: 20px;
padding: 15px;
border: 1px solid var(–border-color);
border-radius: 5px;
background-color: #fdfdfd;
}
.input-group label {
display: block;
margin-bottom: 8px;
font-weight: bold;
color: var(–primary-blue);
}
.input-group input[type="number"],
.input-group input[type="text"] {
width: calc(100% – 22px); /* Account for padding and border */
padding: 10px;
border: 1px solid var(–border-color);
border-radius: 4px;
font-size: 1rem;
margin-top: 5px;
}
.input-group select {
width: 100%;
padding: 10px;
border: 1px solid var(–border-color);
border-radius: 4px;
font-size: 1rem;
margin-top: 5px;
background-color: white;
}
button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: var(–primary-blue);
color: white;
border: none;
border-radius: 5px;
font-size: 1.1rem;
cursor: pointer;
transition: background-color 0.3s ease, transform 0.2s ease;
margin-top: 10px;
}
button:hover {
background-color: #003366;
transform: translateY(-2px);
}
button:active {
transform: translateY(0);
}
#results {
margin-top: 30px;
padding: 25px;
border: 1px solid var(–border-color);
border-radius: 5px;
background-color: var(–light-background);
}
#results h3 {
color: var(–primary-blue);
margin-bottom: 15px;
}
#results p {
margin-bottom: 10px;
font-size: 1.1rem;
display: flex;
justify-content: space-between;
padding: 8px 0;
border-bottom: 1px dashed var(–border-color);
}
#results p:last-child {
border-bottom: none;
font-weight: bold;
font-size: 1.2rem;
color: var(–primary-blue);
}
.result-value {
font-weight: bold;
color: var(–success-green);
}
.article-section {
margin-top: 40px;
padding: 30px;
background-color: #fff;
border-radius: 8px;
box-shadow: 0 4px 15px rgba(0, 0, 0, 0.1);
}
.article-section h2 {
text-align: left;
margin-bottom: 20px;
}
.article-section h3 {
color: var(–primary-blue);
margin-top: 25px;
margin-bottom: 10px;
}
.article-section p {
margin-bottom: 15px;
}
.article-section ul {
margin-left: 20px;
margin-bottom: 15px;
}
.article-section li {
margin-bottom: 8px;
}
@media (max-width: 600px) {
.loan-calc-container {
padding: 20px;
}
h1 {
font-size: 1.8rem;
}
#results p {
font-size: 1rem;
flex-direction: column;
align-items: center;
text-align: center;
}
#results p span {
margin-top: 5px;
}
}
Understanding Simple and Compound Interest
Interest is the cost of borrowing money or the return on an investment. Understanding the difference between simple and compound interest is crucial for making informed financial decisions, whether you're saving, investing, or taking out loans.
Simple Interest
Simple interest is calculated only on the principal amount of a loan or deposit. It does not take into account any accumulated interest from previous periods. This means the interest earned or paid remains constant over the loan or investment term.
The formula for calculating simple interest is:
Simple Interest (SI) = P × R × T
Where:
- P = Principal amount (the initial amount of money)
- R = Annual interest rate (expressed as a decimal)
- T = Time period (in years)
The total amount (Principal + Interest) after T years is:
Total Amount (A) = P + (P × R × T) or A = P (1 + RT)
Compound Interest
Compound interest, often referred to as "interest on interest," is calculated on the initial principal amount and also on the accumulated interest from previous periods. This can significantly accelerate the growth of investments over time due to the snowball effect.
The formula for calculating compound interest is:
A = P (1 + r/n)^(nt)
Where:
- A = the future value of the investment/loan, including interest
- P = the principal investment amount (the initial deposit or loan amount)
- r = the annual interest rate (as a decimal)
- n = the number of times that interest is compounded per year
- t = the number of years the money is invested or borrowed for
The compound interest earned is the total amount (A) minus the principal (P):
Compound Interest (CI) = A – P
When to Use Each
- Simple Interest is commonly used for short-term loans, like payday loans or car loans, where the calculation is straightforward.
- Compound Interest is more prevalent in long-term savings accounts, investments (stocks, bonds, mutual funds), and mortgages, as it allows money to grow exponentially over time. Understanding compounding is key to effective wealth building.
Example Calculation
Let's consider an investment of $10,000 at an annual interest rate of 7% for 5 years, compounded annually.
- Principal (P) = $10,000
- Annual Rate (r) = 7% = 0.07
- Time (t) = 5 years
- Compounding Frequency (n) = 1 (Annually)
Simple Interest Calculation:
SI = $10,000 × 0.07 × 5 = $3,500
Total Simple Amount = $10,000 + $3,500 = $13,500
Compound Interest Calculation:
A = $10,000 (1 + 0.07/1)^(1*5)
A = $10,000 (1.07)^5
A = $10,000 × 1.40255 = $14,025.52 (approximately)
Compound Interest = $14,025.52 – $10,000 = $4,025.52
In this example, compounding interest yields an additional $525.52 over simple interest after 5 years, demonstrating the power of compounding.
function calculateInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualRate = parseFloat(document.getElementById("annualRate").value);
var time = parseFloat(document.getElementById("time").value);
var compoundingFrequency = parseFloat(document.getElementById("compoundingFrequency").value);
// Input validation
if (isNaN(principal) || isNaN(annualRate) || isNaN(time) || principal <= 0 || annualRate <= 0 || time <= 0) {
alert("Please enter valid positive numbers for Principal, Annual Rate, and Time Period.");
return;
}
var rateDecimal = annualRate / 100;
// Calculate Simple Interest
var simpleInterestAmount = principal * rateDecimal * time;
var simpleTotalAmount = principal + simpleInterestAmount;
// Calculate Compound Interest
var compoundTotalAmount = principal * Math.pow((1 + rateDecimal / compoundingFrequency), (compoundingFrequency * time));
var compoundInterestAmount = compoundTotalAmount – principal;
// Display Results
document.getElementById("simpleInterestAmount").textContent = simpleInterestAmount.toFixed(2);
document.getElementById("simpleTotalAmount").textContent = simpleTotalAmount.toFixed(2);
document.getElementById("compoundInterestAmount").textContent = compoundInterestAmount.toFixed(2);
document.getElementById("compoundTotalAmount").textContent = compoundTotalAmount.toFixed(2);
}