Getting the most out of a personal loan calculator
A personal loan calculator can do far more than simply help you work out your minimum monthly repayments. It can also be a very effective comparison tool, as well as a good way to help you budget more easily. You can also use it to create a debt reduction plan.
Here are some ways you can benefit from a personal loan calculator.
Interest rate comparisons
Input the amount you want to borrow into a personal loan calculator, add the term and the proposed interest rate. You should be given a repayment amount that should have your loan repaid by the end of the term.
Many calculators will also show you exactly how much interest you’ll repay over the total term. If you amend the interest rate higher or lower, you can see what affect this can have on your payment amounts. It will also alter the results for how much interest will be payable at the end of the term.
Shop around with different banks and lenders to see what interest rates they’ll charge and put these rates into the calculator to see how it can affect your payments.
Budgeting your repayments
If you’ve input your borrowing amount into a personal loan calculator and you’ve received a monthly repayment amount that looks too high for your budget, you can actively reduce the amount you need to borrow until the repayments suit you better.
This way you’ll know exactly how much you can afford to borrow while still comfortably keeping up with the repayments.
Sometimes applying for a personal loan can be an effective way to consolidate other debts, such as credit card balances. Enter in the amount you’ll need to borrow and look closely at the monthly repayment amount. You could find it’s much less than you’re paying now on higher-interest charging debts.
If you want to work on a way to repay your loan sooner, you can change the minimum repayment amount to a higher figure. Paying a little more than the payment required can speed up your debt reduction plans and reduce the amount of interest you pay in the long run.
Learn more about the steps to take for effective credit card debt reduction
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