The Ins and Outs of Loan Calculators
Most people would be familiar with the concept of borrowing money, after all, many people do just that when they take out short term loans. However, understanding everything there is before getting a loan can be a little difficult – here’s how loan calculators work.
What is a loan calculator?
A loan calculator is designed to give you an idea of how much a short term loan is going to cost. It will help you gain a better understanding of how much you could borrow and how much your repayments might be.
How do loan calculators work?
Using loan calculators is quite simple. As they are an easy-to-use tool that will let you know exactly what your potential loan’s monthly repayments could be. To use the calculator simply choose the amount you plan to borrow on the slider. Next, choose a time frame you would prefer to repay your loan within. Once you’ve done this your results will be automatically calculated for you, allowing you to see your potential interest, monthly repayments and the total amount you will have to repay.
A few terms to get you started
Loan calculators can help you save money by playing around with the figures. So, before having a play around with our loan calculator, be sure that you understand some key vocabulary first.
Interest Rate
Nearly all loan structures include interest, which is the profit that banks or lenders make on loans. Interest rate is the percentage of a loan paid by borrowers to lenders. For most loans, interest is paid in addition to principal repayment. Loan interest is usually expressed in APR*, or annual percentage rate, which includes both interest and fees.
Loan Term
A loan term is the duration of the loan, given that required minimum payments are made each month. The term of the loan can affect the structure of the loan in many ways. Generally, the longer the term, the more interest will be accrued over time, raising the total cost of the loan for borrowers, but reducing the periodic payments.
Saving money with a loan calculator
By playing around with our loan calculator, it could give you a rough estimate of what you could be paying when taking out a loan. However, what most people are unaware of is that it can save you money.
*The calculator results here are based on the representative APR for the amount you enter. Your actual rates and repayments may differ and will be based on your personal circumstances, the loan amount and term.