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Loan calculator are important tools you should use before taking a loan from any loan company or app, and they help you to make better financial decisions. Before getting a loan from anyone or a company, you should ask yourself an important question: “Can I pay back this loan?”. A loan calculator will help you answer this question by showing how much you are to pay each month; this will help you budget your finances and prevent surprises.
In this article, we will explain a loan calculator, how to use it, and some good loan calculators you can use.
What is a Loan Calculator?
A loan calculator is a simple financial tool that helps you estimate how much you will repay for a loan. By entering the loan amount, repayment time frame, and interest rate into the calculator, you will get an estimate of the monthly payment for the loan.
A loan calculator is an essential tool for businesses and individuals considering taking a loan; it helps them compare different loan apps and companies and determine which is best. The calculator will also help you determine which loan type is affordable as it calculates the amount of each interest rate.
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It is possible for you to take out a loan at least once during your lifetime to sort out financial expenses like school bills, starting a business, mortgage, buying a car, or landed properties; there are times you may need more money to add to your savings for a project. A loan calculator will help you check out different loan types and know if their prices are fair. There are many online loan calculators that you can use anytime without paying money.
Benefits of a Loan Calculator
There are some benefits you get when you use loan calculators, and they include:
Easy to use
Loan calculators are very easy to use and user-friendly. You only need to visit the calculator website and enter the amount you wish to borrow, the repayment time, and the interest rate to get answers. Some loan calculators have a customer support team available to help with any step.
Accurate results
Loan calculators give correct answers, unlike manual calculators that show errors. With a manual calculator, you may need to use a pen and paper to write down formulas and interest rates; you may also need to sit for hours and run the calculations many times to avoid mistakes. However, with a loan calculator, you get accurate results in one sitting within seconds or minutes.
Time-saving and faster
Loan calculators save you time with their fast results, you do not have to visit the loan company for a staff member to show you the total amount you will repay, nor will you sit for hours calculating interests and total repayment amount. The loan calculator does the whole calculation for you in a twinkle of an eye anytime and anywhere. You only need the loan calculator website or app and a steady Internet connection.
A faster and more straightforward comparison of loan plans
You can easily calculate the interest and total repayment amount of various loan plans to match your credit score using a loan calculator without paying any agent or financial advisor. On your own, you can experiment with different loan products and compare various loan companies or apps. By comparing these plans or products, you can get a loan amount that will not strain your monthly budget or lifestyle.
Dynamic and flexible
Most loan calculators are dynamic and flexible, and this means you can easily change the figures to match the number of times you have in mind. The numbers on these calculators are not fixed; you can carry out multiple calculations in a sitting without having to log in again or revisit the site.
Loan Calculator Basic Terms
Here are the basic terms on loan calculators you should know:
Principal
The principal is the total amount of money you are borrowing from a loan company or app. The loan app or company pays the principal in a lump sum while you pay it back in bits on a monthly basis.
Loan Term or Tenure
The loan term or tenure is the length of time you have to pay back a loan. The longer your loan term, the lower you have to pay back each month. However, you should know that a longer loan means more interest you will pay back.
Interest
The interest is the rate at which the money you owe increases. This interest rate is a percentage of the principal you borrowed and expressed as an annual percentage rate (APR) and any additional fee charged by the loan company or app. The APR is slightly different from the monthly interest rate; the APR includes the monthly interest rate, maintenance charge, or other costs on an annual basis. When paying back the loan, you will pay back the amount you borrowed and additional money, which is the interest.
Factors that Affect the Interest You Pay
Some factors will affect the amount you will pay as an interest to the lender; here are some of them:
Loan Principal
The amount you are borrowing from a loan company or app will determine how much interest you will pay back. The larger amount you want, the more interest the lender will charge you because it means more risk in case there is a payment default. Someone who borrows N20,000 over 5 years with a 2% interest will pay less than someone else who borrows N30,000 and with the same terms.
Loan repayment term
The time you have to repay your loans will significantly affect your interest rate. A shorter time frame comes with a lesser interest rate as you will try to maximize the little time you have for the loan, while a more extended time will require a lesser monthly repayment amount but higher interest rates.
Repayment schedule or plan
The rate at which you make payments to your loan app or company has an influence on the interest rate; you can repay weekly, biweekly, or monthly. However, the more you make payments frequently, the more your principal and interest reduce. If you wish to reduce the interest you pay for a loan, make repayments more regularly.
Repayment Amount
Having a higher repayment amount can save you a considerable amount of interest. Remember that your interest rate runs higher as the month goes on, and the less you repay each month, the higher amount you will pay as interest.
How To Use a Loan Calculator
It is effortless to use a loan calculator; follow the steps below to calculate the amount you will pay back for a loan.
- Log into the loan calculator app or website.
- In the space “Loan Amount,” type in the amount your loan plan is giving out.
- Enter the interest rate in the space labeled “Interest Rate”; this usually has a percentage sign beside the box.
- In the “Loan Term” space, enter the time length. Under the loan term, select the repayment schedule, either month or year.
- Click on “Calculate,” and you will get answers like the monthly payment and total interest you will pay.
List of Genuine Loan Calculator Apps and Websites
Here is a list of loan calculator apps you can use:
- RK Loan Calculator with 1 million plus downloads and a 4.5-star rating.
- Bishinews Financial Calculators with 5 million downloads and a 4.5-star rating.
- Pixelsdo Mobile Loan Calculator with 1 million downloads and a 4.4-star rating.
- SC Finance Brokers Loan Calculator with 1 thousand downloads and zero rating.
- TVApp Loan Calculator with 50 thousand downloads and a 4.5-star rating.
- Financept Loan Calculator with 100 thousand downloads and a 4.5-star rating.
- Nimrod Project Mortgage/Loan Calculator with 10 thousand downloads and zero rating.
- Happy-verse EMI to Loan Amount Calculator with 100 thousand plus downloads.
- TSoftOne Loan Calculator with 100 thousand downloads and a 4.8-star rating.
- Transpose Solutions Loan Calculator with 100 thousand plus downloads and a 4.5-star rating.
Some free Loan Calculator websites you can use include:
- https://www.calculatorsoup.com/calculators/financial/loan-calculator-simple.php
- https://www.bankrate.com/loans/loan-interest-calculator/
- https://www.calculator.net/loan-calculator.html
- https://www.smepayroll.com.ng/calculator/loan/
- https://www.gtbank.com/financial-calculators
- https://cred.club/calculators/simple-loan-calculator
- https://www.marinerfinance.com/loan-calculator/
- https://www.investopedia.com/personal-loan-calculator
- https://www.firstbanknigeria.com/personal/loans/loan-calculator/
- https://www.creditkarma.com/calculators/personal-loans/simple-loan
Frequently Asked Questions
What is the easiest way to calculate interest?
The easiest way of calculating interest is by using this formula: Simple Interest = Principal x Interest Rate x Time; that is, multiply the principal amount by the interest rate and time.
What is the formula for a simple interest monthly payment?
The formula for simple interest monthly payment is (P × R × T) / (100 × 12); that is, Principal × Interest Rate per annum × Time divided by 100 × 12 months.
How do you calculate interest per day?
The formula for calculating daily interest is P × n × r / 100 × 1/365. P is the principal amount, n is the number of days, and r is the interest rate per annum.
Bottom Line
Loan calculators are essential as they help you know how much you will pay back after borrowing money from loan apps or companies. They are also faster and easier, giving you much time to compare different loan plans. We have listed some reliable loan calculator apps and websites, and you can use any of them for your calculations.
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