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Useful Tips for Loan Calculation

When taking out a loan, a person immediately treads on a path that involves a lot of obligations. Often this is not easy, and the borrowers can encounter some difficulties, which initially did not even occur. If you require a fast and easy loan, you can always contact Payday Depot. However, if there is a larger sum in question, you can make the task easier for yourself by using loan calculation formulas.

Types of Loans 

Loans can be divided into:

  • amortized loans, 
  • interest-bearing loans,
  • credit card loans

Depending on the type, you can calculate your contribution by applying one of the formulas for accurate calculation and determine the full amount you will need to deposit to repay the loan.

The Formula for Amortized Loan Payments

a/{[(1+r)^n]-1}/[r(1+r)^n]=p

Using this formula, you can calculate the value of the installments, where:

p – the monthly payment

a – the loan amount

r – the interest rate

n – the number of payment periods

The Formula for Interest-Bearing Loan Payments

Using the same values we wrote about above, you can calculate the value you need to cover interest-bearing loan payments. The formula you need is:

a*(r/n)=p or (a*r)/12=p

Calculation of Credit Card Loan Payments

This task has its nuances because credit card payments are usually not stable and constantly fluctuate. However, there is a necessary minimum that the cardholder must repay every month, which is usually prescribed in the loan agreement.

Other Calculation Tips

Sometimes it isn’t easy to immediately understand how much the total loan payment will come out. You can find online calculators on the Internet, both universal and specialized on the type of loan, which will help you do the necessary math. 

It is critical to consider the cost of the goods for which the loan is taken, the interest rate, and other figures related to your specific case. We recommend paying special attention to such an indicator as the Annual Percentage Rate, which is often confused with the value of the Interest Rate. APR includes all other values in addition to the IR – it can be fees for brokers, closing costs, rebates, and discounts. In almost all cases, this indicator is greater than the nominal Interest Rate.

Making Loan Payments as Comfortable as Possible

The interest you will be paying back together with the loan is the main criterion of your expenses you should keep in mind. Here are some ways you can reduce your interest rate contributions:

  • сompare interest rates in different banks in advance and choose the most suitable option for you; 
  • make larger monthly repayments; 
  • if possible, repay the loan in one go; 
  • use a credit card with an initial rate of 0% per annum.

Thus, we have tried to collect the most valuable information regarding the calculation and repayment of loans. We hope that these tips were useful to you, and we wish you success in all your financial transactions.

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