How to Calculate Your Loan Repayment Online?

How to Calculate Your Loan Repayment Online?

Overview

A loan is usually needed when one has an emergency situation that they might need to deal with. A loan can also be used to pay for a car, a house, school fees and any other personal matters that might need to be dealt with. Before deciding to take a loan it is wiser to check how much will be required to pay it back and the interest that one will be charged on that particular loan. Customer also calculate their loan repayment online to check if they will be able to afford a loan considering their living expenses and monthly income. They also check for any other loans that they are currently paying. Knowing your loan repayment term prepares you for the future and equips on your expenses. Calculating helps you to understand how your loan will affect your finances. It also helps you to compare if you can borrow less or more and the effect it has on your monthly expenses. Before you calculate your loan repayment you also need to know the type o loan that you will be getting. Different loans are calculated differently. The results that you get after calculating your loan repayment are just a rough estimate they might differ slightly with the one that your lender will use.

Most banks have got online calculator on their sites where customers entre the amount they require and the period they will pay it back. Below is another formula that can be used to calculate your loan repayment terms.

Loan Payment = Amount / Discount Factor or P = A / D

You need the following values:

  • Number of Periodic Payments (n) = Payments per year times number of years
  • Periodic Interest Rate (i) = Annual rate divided by number of payment periods
  • Discount Factor (D) = {[(1 + i) ^n] – 1} / [i(1 + i)^n]
Categories: Financial tips