Bank Loan Calculator
Probably the biggest consideration for any borrower before they apply for a loan is how much can they afford to pay back each month without being too financially stretched?
Most of us understand that the bigger the amount we borrow the bigger our monthly repayments will be, but with so many loan deals on the market and so many variables to take into account, working out how much a loan will cost you each month can be tricky.
A bank loan repayment calculator will help you do this very simply, and all you need to do is enter a few details. But first it’s useful to understand exactly how a lender works out your monthly repayments in the first place so you can get an idea of the basic lending systems.
How Are You Paying Interest?
There are normally two types of interest options available to you- fixed and variable. A fixed interest loan gives you one rate of interest, which remains constant throughout the full term of the loan.
Regardless of what national rates of interest do, your rate will remain the same meaning you’re protected from any steep rate rises. It also means your loan repayments are generally easier to work out and will remain consistent.
A variable rate loan has an interest rate that can rise and fall in line with national rates. What this means to the borrower is that the amount they pay back can and will be affected. In the event of a rate rise your loan payments will increase, likewise when rates drop so will your repayments.
How Is Interest Figured Out?
Lenders generally work out interest based on the same calculation. Interest is charged against any unpaid balance each day, and the percentage charged is your annual interest rate, divided by 365.
So if the annual interest rate on your loan is 9% then your overall balance will increase by 0.02% per day (roughly).
So What Does A Bank Loan Calculator Do?
A bank loan calculator will help you work out in advance what your monthly repayments will be on a loan before you apply. It’s a great way of comparing the affordability of products without having to go through a wasted application.
The information a calculator will want from you is the amount you intend to borrow, the length of time you want the loan for, the advertised interest rate of the loan, and whether you want a fixed rate or variable loan product.
From there it will calculate the monthly repayments you’ll be required to make. At this point you can decide whether or not the loan is feasible for you. You may need to consider borrowing over a longer period of time, or perhaps even think about borrowing less than you’d originally wanted.
The best way to know whether a loan is affordable is to look at your budget in detail. On paper list all of your earnings over the course of a month, and all of your expenses. On your expenses list be sure to include an amount for groceries and other essential things like petrol.
Although the amount you spend on these things each month may change, they must be included in your expenses if you’re to get an accurate result. Once you have both your lists simply subtract your expenses from your earnings and see how much money is left.
The money left is your surplus and could go towards the repayment of a loan. If you have $300 each month then repaying a loan at $100 a month would probably be pretty affordable, and you’d still have money spare in case of emergency.
On the other hand if you had that same $300 spare, repaying a loan at $250 a month would leave you very little spare cash, and no margin for error if things went wrong.
It’s always better to play things safe when it comes to loan repayments, and a bank loan calculator can help you plan and budget more effectively.
Featured Personal Loans
| Personal Loan | Details | Min Interest Rate | Min Comparison Rate | Min Loan Amount | Min Loan Terms | Apply Fee | |
|---|---|---|---|---|---|---|---|
 ME Bank Personal Loan | A low rate personal loan from ME Bank with no application fee for a limited time. | 13.59% | 13.81% | $5000 | 1 year | $0 |   |
 Aussie Personal Loan | A smart way to consolidate your bills to save time and money so you can pay for your holiday, a wedding or renovate the house. | 13.90% | 14.84% | $3000 | 1 year | $199 | |
 Sugar Money Personal Loan | Fixed rate personal loan with flexible options to get you funds when you need it. | 13.99% | 15.00% | $3000 | 2 years | $250 | |
 bankmecu Personal Loan | A convenient and fast way to purchase a car or debt consolidation with affordable rates and fees. | 13.49% | 14.55% | $1000 | 1 year | $150 | |
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