A personal loan calculator is an online tool or platform that helps users compute the overall cost of borrowing money. It typically requires inputting details such as the loan amount, interest rate, and repayment term.
Then this helps to calculate the estimated monthly payment, total interest payable, and total cost. It serves various purposes, such as determining the affordability and convenience of taking one or comparing different options.
It also provides users with an easy-to-understand breakdown of their credit cost. Thus, enabling them to make informed decisions about their borrowing. They are readily available online and can be used free of charge.
Why Do You Need Personal Loan Calculator?
Getting a personal loan calculator can help you determine many of its features. It tells you the amount you can borrow, the estimated interest rate you will be charged, and your monthly payments. This information is helpful because it lets you make smart financial decisions. So, it ensures you can sort out the debt without financial difficulties.
Using one can also help you to compare different loans and find the best deal for your circumstances. You can quickly see the differences in their interest rates and repayment amounts by inputting the relevant details for each. So, it allows you to choose the most affordable option.
It can be a great help when planning to buy a car, make home improvements, sort medical bills or debt consolidation. A loan calculator can help you understand the financial implications of your borrowing.
Summarily, it’s the best tool to use when shopping around for the best loan deal. It can quickly compare the costs of different online lenders and products.
A loan calculator can help you understand the financial implications of your borrowing, such as the loan upfront cost and how quickly you will need to pay it back. With this tool, you can compare the interest rates and fees between online only lenders.
Additionally, you can use a loan calculator to view an amortization schedule and determine the number of business day that a loan will take to be processed. Summarily, it’s the best tool to use when shopping around for the best loan deal. It can quickly compare the costs of different online lenders and products.
How To Use Personal Loan Calculator
To use one, you must input specific details to compute the loan’s cost and terms, which help to understand estimated monthly payments. These details include the loan amounts, term, annual percentage rates (APR), personal loan fees, repayment start date, etc.
Below is a brief explanation of each of these crucial inputs:
- Loan Amount: It refers to the lump sum the user wants to get from the credit unions. It determines the total cost of credit, including interest rates and fees.
- Loan Term: This is the length of time that the borrower has to repay the credit. It can vary from just a couple of months to many years, depending on the lender’s terms and the borrower’s repayment ability.
- APR: The Annual Percentage Rate (APR) is the interest rate the borrower will charge, expressed as a percentage fixed. The APR is an approximate sum of the interest rate and any other fees the lender charges.
- Fees: This refers to any additional costs the lenders charge to the borrower. These can include origination fees or prepayment penalties.
- Repayment Start Date: It is the date when the borrower needs to start making monthly payments on the debt. The repayment start date can vary based on the lender’s terms.
Read More: Loan Calculator
How To Understand Personal Loan Calculator Results
The results you get from your inputs include the total cost of the loan, the estimated monthly payment amount, and the overall interest rate paid. These results are typically displayed in a clear and easy-to-understand format, which anyone with ease can read.
For example, a borrower inputs loan funds of $10,000, an APR of 7%, and a term of 36 months into a personal loans calculator. The calculator will provide the following results:
Total Interest rate: $1,130
Total Repayments: $11,130
Monthly Payments: $309
Total interest paid refers to the interest rate the borrower will pay over the term. In this scenario, the borrower will pay $1,130 in interest. Total repayments represent the amount to repay during the loan term, including the principal and estimated interest.
Here, the borrower will repay a total of $11,130. Finally, the monthly repayment amount is the actual payment the borrower will monthly for full repayment. So, the borrower must make monthly repayments of $309.
How To Compare Personal Loan Costs
Comparing personal loans using a calculator is a straightforward process. Start by entering the loan amount, loan term, APR, and any other fees associated with each loan offer you’re considering. Once you’ve entered these details, the calculator will generate results for each option, regardless of your credit score.
To choose the best option:
- Compare the results for each option side-by-side.
- Look for the option that has the lowest total cost and the most favorable terms.
- Pay great attention to the personal loan interest rate, origination fee, and any fees associated with each, as these can significantly impact the total cost.
Other features include the lender’s reputation, credit score range, customer service, and repayment terms. Always opt for a credit union with a good reputation for customer service and a track record of timely loan payments.
Search for options that offer flexible repayment terms. For example, additional payments without a penalty or allowing you to change the repayment term if needed.
Read More: How to Use Financial Calculators?
What Should You Consider Before Taking Personal Loans?
Before applying for personal loans, the first step should always consider several factors. We have taken the time to discuss some of these factors in detail to help you access the necessary information about your borrowing.
By understanding these factors and how they can impact the cost of the desired loan, you can make better decisions. It will also choose the best loan option for your needs, even with a bad credit report.
Decide On The Amount Of The Loan
Knowing the amount of money you need when selecting a personal loan is important for several reasons. First, too much borrowed money can result in more interest charges.
It can also require a longer repayment term, thereby increasing the overall cost. Similarly, borrowing too little money may not cover your needs, leaving you with insufficient funds to cover your expenses.
You should carefully evaluate your current financial situation. Then determine your borrowing needs to decide on the needed amount. Consider how much money you need to cover expenses such as credit card debt consolidation, refinancing, home improvements, etc. But also consider the prompt monthly payment ability.
Beware Of Scammers
Always watch out for scammers posing as lenders when choosing personal loans because it can be dangerous. This is a piece of good advice for those seeking a student loan and have low credit scores. Scammers can cause financial loss, identity theft, and other types of fraud.
Scammers often target vulnerable borrowers who need quick cash. They use tactics, such as fake loan offers, to trick borrowers into providing personal and financial information.
Research what multiple lenders require and only apply with reputable, trusted institutions to avoid scammers. Read the terms and conditions, check for lower credit scores requirement, and ask questions if anything needs to be clarified.
Since they often make exorbitant offers, try to be wary of any unsolicited loan request. Only provide sensitive information such as SSN after verifying the lender’s legitimacy.
Find The Best Lender
Finding the best lender is crucial when selecting personal loan alternatives because it can impact its overall cost and terms. To find the best lender, consider factors like the lender’s reputation, interest payments, origination fee, monthly payment fees, terms, and customer service.
First, explore many lenders online and read customer reviews to determine their reputation. It’s also important to compare loan offers, such as interest rates from different lenders, to find the most affordable option, especially if you have a poor credit history.
Loan terms such as the repayment period and prepayment charges should also be considered when selecting a lender. Choose a lender that offers flexible terms that align with your financial goals and budget.
Conclusion
Personal loan calculators are an excellent tool for anyone considering personal loans and payday loans. It’s generally useful for secured loans and unsecured loans. They can help borrowers estimate and lower monthly payments and the total cost of the loan and compare offers from different lenders.
By considering crucial factors such as credit score, lenders amount, term, actual APR, origination fee, etc., you can select the best loans that meet your needs.
We also advise you to be vigilant of scammers, pick the right loan amount, consider the lender’s reputation, and understand the loan terms. Using the calculators and following these tips allows you to make sound financial decisions and avoid unnecessary losses.
Sources Used in Research for the Article:
- Payday Loan Key Terms, Consumer Financial Protection Bureau, https://www.consumerfinance.gov/consumer-tools/payday-loans/answers/key-terms/
- What are some common types of scams, Consumer Financial Protection Bureau, https://www.consumerfinance.gov/ask-cfpb/what-are-some-common-types-of-scams-en-2092/
- Understanding Your Credit, Federal Trade Commission, https://consumer.ftc.gov/articles/understanding-your-credit