A loan calculator is an application or widget that assist you in calculating an estimate of your monthly payments on a loan, be it mortgage loan, auto loan, car loan or even education loan.
This Loan Payment Calculator gives you measure of the estimated payments for different loan amounts, interest rates and terms as well as the annual salary required to manage them without too much financial difficulty.
Credible is a good website to calculate and also compare private student loan.
They provide a loan calculator that help you calculate Federal education loans (Stafford, Perkins and PLUS) and most private student loans. (This student loan calculator can also be used as an auto loan calculator or to calculate your mortgage payments.)
When using a loan calculation It is very important to include taxes and as this will be required by most lenders.
Six Steps To Calculate A Loan
1. Open an online loan calculator:
There are several quality and efficient loan repayment calculator on the internet. This includes Bankrate.com, Credible.com and so on.
You can as well make your own loan calculator in Excel (Watch out for a topic on that).
2. Enter the loan amount:
This is the total amount of money you have taken or intend to borrow as a loan. If you are calculating a partially paid loan, enter the amount of money you have left to pay. This field may also be tagged as “base amount.”
3. Enter the interest rate:
This is the current annual interest rate on your loan, in percentage form. For instance, if you pay a 6% interest rate, type in 6.
The compounding interval does not matter here. The interest rate specified should be the nominal annual interest, even if interest is calculated more frequently.
4. Enter the loan term:
This is the amount of time you plan to spend paying off the loan. Use the amount of time specified on the loan conditions to calculate the minimum monthly payment required. Use a shorter amount of time to calculate a higher monthly payment that would pay off the loan sooner. Paying the loan off sooner will also mean less total money spent.
5. Enter the start date:
This is used to calculate the date when you’ll finish paying off the loan.
6. Hit calculate:
Some calculators will automatically update the “Monthly Payment” field after you enter the information. Others wait until you hit “calculate,” then give you a chart or graph showing your payment schedule.