Online loan calculators have become handy and convenient financial planning tools for people looking to borrow a substantial amount from one or other lending institution. Whether it is a home loan, an auto loan, or something else, a loan calculator can help you know your repayment terms beforehand or help you find out how much you can borrow depending on your current earnings and monthly expenses.
Accurate information regarding the above is extremely important for proper management of your finances. For instance, if your monthly/weekly payments are too high, you can soon end up facing a number of issues such as late payments, high interest accumulation, bad credit and the like. However, with many different types of online loan calculators being handy these days, chances are rare that you will opt for terms that will be difficult to handle in the future. Keep in mind, too, that lenders themselves will be using these very tools to determine how much they can safely lend to any particular applicant.
Different Types of Loan Calculators
Loan repayment calculators or mortgage loan calculators happen to be the most widely used loan calculating tools. So for example, if you are applying for a home loan, you can use a home loan repayment calculator to determine your monthly payments. Fill in the numbers such as the loan amount, the interest rate, length of the repayment period and the calculator will let you know your monthly/weekly/fortnightly payment towards that particular loan. A mortgage calculator will also take into account factors like fixed rate or variable rate, compounding interest, etc.
Another very useful loan calculator is what is commonly referred to as Affordability Calculator or Borrowing Power Calculator. The two are not exactly the same, but we’ll come to it soon.
Figuring out how much you can borrow is a crucial part of applying for any loan. For example, if you are planning to buy a new home and apply for a home loan towards that purpose, you’ll need to learn about the amount you can comfortably afford to repay without impacting your current lifestyle too much.
So, in an affordability calculator, you put in the numbers for expenses such as utility bills, school fees, debt repayments, etc. and your current monthly earnings and the calculator will tell you how much you can comfortably borrow for your new home.
The borrowing power calculator works in much the same way, only difference being it is programmed to tell you the ‘maximum’ amount you can borrow from a traditional lending institution such as a bank.
Also, when it comes to home loans, Stamp Duty and Upfront Costs Calculator happens to be another handy tool. Many online home loan companies will offer this tool to their prospective customers. This loan calculator helps you determine all the upfront costs of purchasing a home, including government fees, stamp duty, lenders mortgage insurance, etc.
Loan Comparison and Debt Refinancing Loan Calculators
Apart from the above, other popular loan calculators include loan/mortgage comparison calculators and debt consolidation/refinancing calculators. The former allow a borrower to compare different loan offers so he can find the best deal depending on his requirements. All good loan comparison calculators will take into account any and all fees related to both loan offers, including interest rates (fixed or variable), whether or not an offer comes with a good introductory rate, etc.
On the other hand, loan refinancing calculators are helpful when one is considering refinancing or consolidating a debt. With these calculators, you can compare the new loan offers with your current one and get to know exactly how much savings you’ll make by transitioning to a new loan.