What is the difference between simple interest and compound interest?
1. The concepts of simple interest and compound interest are different. Simple interest refers to the interest generated by fixed principal, and compound interest refers to the principal and interest as the next principal.
2. The interest of simple interest and compound interest is different, and the interest of simple interest is less than that of compound interest.
3. The calculation methods of loan simple interest and compound interest are different. Simple interest is based on the principal of the loan, and compound interest of the loan is calculated according to the agreed period.
4. The calculation formulas of loan simple interest and compound interest are different. The calculation formula of simple interest is simple interest = loan principal * loan daily interest rate * loan days, and the calculation formula of compound interest is F=P*( 1+i)N (power).
How to see whether your loan is simple interest or compound interest?
If it is a bank mortgage loan, you don't have to worry so much. Generally, bank mortgage loans are calculated by simple interest, and there is no interest rolling.
However, if you use online loans, then you need to pay attention at this time. In the loan contract that you are not concerned about, there may be compound interest. At this time, you need to open your eyes and see whether it is compound interest or simple interest. If it is compound interest, or the interest rate of its own loan is relatively high, it is recommended to transfer to a regular bank loan to avoid the interest rolling and causing more and more interest, which is impossible to repay.