What does a loan calculator do and how does it work?
You want to build a house or buy a car and need a loan for it ? With an online loan calculator, a comparison can be made between different providers and then the best offer can be claimed. There are different uses that you should give when borrowing at best.
Likewise, you can these uses may continue in a loan calculator that can be found online, enter: There are loan calculator for a home purchase, loan calculator for a condo loan calculator for an annuity loan, loan calculator, a finance car and much more offered.
Whether you need a loan calculator for a house or want to test a loan calculator for another financing, important questions must be clarified in advance: Which factors are considered by a loan calculator? How does a loan calculator work? How do you find the right loan calculator?
In short: Information about the loan calculator
- Before you decide on a loan, you should use a loan calculator to calculate the financing and other factors to find the right provider.
- Some loan calculators allow you to enter the type and purpose of the loan. It is important to specify the nature and purpose of the loan in order to obtain better terms.
- With a loan calculator you can calculate the duration of the contract, the amount of interest and the monthly installments.
What factors are important in a loan?
Then you should be familiar with the most important terms related to borrowing, as you would otherwise overlook hidden fees or borrow on bad terms. So what aspects are important when you take out a loan?
- For a loan calculator, an APR is important: The APR is the interest rate you have to pay when you have a loan. Most financial institutions quote “x percent interest” on their bids, which usually means the borrowing rate or nominal rate. However, the effective interest rate incurs further costs, such as bank fees. For this reason, the effective interest rate is more meaningful than the borrowing rate, as the total charge is indicated.
- The loan calculator takes the monthly rate into account: Before signing the installment loan contract, you should check that you can afford to raise the installment every month. It is important to consider all expenditures and also plan for unexpected expenses. It is not advisable to enter into the loan calculator a high monthly installment and to go into dispoaction every month to be able to afford the repayment. On the other hand, it makes no sense to choose a low monthly installment and to prolong the repayment, which generates more interest.
- The use of credit: It is important to always communicate the purpose of the loan to the bank or the bank, as you can save and have more chances to actually get a loan.
- Special repayments: It is advisable to inquire with the respective financial institution whether special unscheduled repayments are possible. Special repayments allow you to repay part of the loan early if you incur additional income such as tax refunds or holiday pay during your term.
- Credit insurance: Specifically, this is a residual credit insurance, also called rate protection or residual insurance, which is to take over the repayment installments in case of unemployment, disability or sudden death. However, this insurance is not required if you already have an endowment or annuity insurance policy, which can usually also be used for this purpose.
What purpose should your loan have?
You can use the loan credit calculator for the following purposes:
- Use a Debt Recovery Loan Calculator: Rescheduling can replace an expensive discretionary loan or an ordinary old loan. If you use the credit line permanently, you can save money with lower lending rates. For the bank, it is a good thing if you want to repost an existing loan, as debt restructuring will reduce your monthly financial burden.
- Loan for free use: If you have selected “free use”, you do not need to prove to the bank what you used the money for.
- Loan calculator for a commercial loan : A loan for self-employed usually has different conditions than a loan for private individuals. Since self-employed people do not have a regular income, creditworthiness can not be proven by income. A commercial loan is usually not earmarked.
- Loan calculator for real estate: Loan calculator for a house, Loan calculator for a flat, Loan calculator for a building, Loan calculator for a plot. Although you do not have to deposit the house or apartment as collateral, the banks here also grant cheap loans, as they assume that it is an increase in value.
- Loan calculator for a car loan : If you want to take out a loan to finance a vehicle, the banks usually grant particularly cheap loans because the vehicle can be deposited as collateral.
What does a loan calculator do?
A loan calculator with repayment plan is used to calculate interest, monthly installments and term. A loan calculator not only has advantages for the provider, but also for the consumer. The consumer can benefit from two major advantages:
- Optimal comparison possibility of the offers.
- Convenient usability of the data.
With a loan calculator an annuity loan with constant payments is calculated, which is often used in installment loans and consumer loans. You can determine what should be calculated with the loan calculator:
- The loan calculator calculates the interest: The loan calculator calculates nominal interest, effective interest, the totality of interest payments.
- The loan calculator calculates the term of the contract.
- The loan calculator calculates the rate.
In addition to the annuity loan, the loan calculator also calculates loans that are final, which are called fixed loans or maturity loans.
What is a repayment plan? In an annuity loan, constant payments are made over the life of the loan. Thus, the installment payments also contain a repayment and an interest portion. With increasing maturity, the repayment portion of the monthly installments grows – the remaining debt decreases accordingly. For each calculation of the loan calculator the repayment plan is shown.
How does our loan calculator work?
For example, you can use our loan calculator to calculate a real estate loan, where the following values are calculated:
- Monthly Rate: How much money you have to repay monthly to settle the remaining debt.
- Effective Annual Interest : How much interest you actually have to pay to the creditor.
- Remaining debt: How much debt you have left.
In order to be able to calculate the above values, you must provide the data below. These represent the terms of each bank:
- Desired loan amount (net loan amount): For example € 100,000.
- Debit Interest: For example, 10 years.
- Fixed debit interest rate : for example 4.5% pa
- Initial repayment: 1% pa
- Payment method: monthly.
- Repayment settlement.