Taking a loan can be quite tricky, regardless of the loan type. Usually, you are in constant consideration of whether you can afford the loan in the long run. And how much to loan so you can stay within your financial limit. 

Well, that is where a loan calculator comes in. It allows you to estimate how much you should borrow to retain your financial flexibility. It also allows you to determine how much you will need to pay monthly over a period to discharge your loan obligation. 

What Is A Loan Calculator? 

A loan calculator helps you to get an estimate of your obligation if you decide to take a loan. Although it does not provide an exact detail of your commitment, it allows you to have a reasonable idea of what you will be paying in the long run.

Usually, this can either be a home loan calculator, equipment loan calculator, or business loan calculator. And this calculator helps with the particular loan type you intend o go for.

The goal is to get an estimate of how much you can borrow or how much you need to pay every month if you get a loan. 

Typically, your loan calculator can fall under two categories. 

Loan Repayment Calculator 

This calculator allows you to determine how much you will need to pay monthly to discharge your repayment obligation. Typically, you will need to input your loan amount, how long you intend to pay, and the interest rate.

Then, you get an estimate of how much you will need to pay either monthly or bi-weekly or weekly to complete repayment. 

Loan Borrowing Calculator 

This calculator allows you to determine how much you can borrow and still maintain your financial flexibility. Typically, you will need to input how much you can repay monthly, bi-weekly, or weekly. You will then enter the interest rate and the loan term. 

Then, it will provide an estimate of how much you can afford to loan considering the details you have entered in.

Why Use A Loan Calculator?

Whether a repayment or borrowing calculator, a loan calculator comes with various advantages. They are tools that support your search for financial flexibility through a loan. 

Specifically, it helps provide an estimate of your financial obligation when it comes to the repayment calculator. In turn, this enables you to achieve full flexibility as you plan your loan repayment. 

For instance, upon entering the relevant details, you can ascertain if the repayment sum is one you can afford. You can extend the loan amount or duration until it fits into your financial capacity. This way, you can determine a favourable term.

It also serves as a guide through which you can weigh the reward and risk that comes with taking a loan. It allows you to stay informed and well aware of your potential obligations under your intended loan arrangement. 

When it comes to the borrowing calculator, it allows you to determine beforehand your loan capacity. In turn, this ensures you avoid over-estimation during your application process, which might cause a lender to deny your loan request. 

How to Use A Loan Calculator

For all the benefits that come with a loan calculator, it is straightforward to use. All you need to do is fill in the necessary field. Then, you get an estimate in seconds. 

Usually, once you hit the calculate tab, your calculator displays your

  • Monthly repayment obligation
  • Total interest payable
  • Total loan amount¬†
  • Estimated discharge date

For you to get this estimate, here is a list of fields you will have to fill.

Loan Amount

This is the total amount of money you intend to loan under the arrangement. This does not include the amount payable as interest. Instead, it is the bare amount you want to borrow. 

Loan Duration 

This is the number of years you want the loan agreement to span for. However, it would help if you kept in mind that your lender sometimes limits this. 

Interest Rate 

This usually gets presented in percentage, and it is the cost of the loan. Usually, you will value this percentage as a fraction of your loan amount. Again, this will depend on your lender. 

Loan Repayment Type

This is the payment system of your loan obligation. Usually, you may decide to discharge the principal and interest simultaneously or discharge the interest obligation first. 

Loan Repayment Frequency 

This is the schedule through which you intend to make repayment. Usually, this can either be monthly, bi-weekly, or weekly. 

Loan Repayment Calculator 

Loan Details

Loan amount

Loan duration

Interest rate 

Loan repayment type

Loan repayment frequency

Calculate

Loan Borrowing Calculator 

Loan Details

Loan duration

Interest rate 

Loan repayment type

Loan repayment frequency 

Loan repayment amount

Calculate

If you have any questions on the loan calculator, you can contact us through our contact options. We will be happy to help you.