Loan calculators have been around for a while to help you understand the kind of loans you should take and how much you can afford for the same. However, with different loan EMI calculators being used, you might not always be familiar with the one you are presented with online. Here are three of the most common ones available and how to use them:
Getting a loan is a great way to start building your dream home or business. Not only are you being practical about the amount of money you will need to build it, but you have a comprehensive plan of how to pay it back monthly as well. This is why loans are important, especially in a country that developing as quickly as India is.
When you are looking to get the right kind of home loan to suit your needs, you are always met with loan EMI calculators on websites that help you decide the amount you can afford for a loan. There are different types of loan EMI calculators that are available but let’s take the three most commonly available and figure out how to work the same:
Mortgage loan payment calculator
So if you are looking at the amount of money you will have to pay every month for your loan, this calculator helps you figure that out. It is quite simple to use as it requires only three different fields that you will have to fill.
– The term
– The loan amount
– The Rate of interest
The loan calculator will then tell you how much money including the interest you will have to pay every month, to cover the loan amount in the number of years you have entered. However, this varies depending on the number of years you choose and the rate of interest that is offered by the banks as well. This can also have different options such as property tax and insurance, but it depends on the calculator you choose.
Refinance savings calculator
If are finding it difficult to pay your loan, then you can refinance the loan to pay it off and pay the other loan. This is normally done when you have already paid some money off from your current loan and you are looking to have some savings every month. It also takes three main points in perspective:
– Current loan – amount you have paid, amount remaining, interest rate, time/years remaining on the loan
– The interest rate on the new loan and how long you are taking it for.
– The kind of costs that will come with the refinancing.
This is a good way to measure the kind of savings you will get and if it is worth it.
Maximum loan amount calculator
This helps you decide on the maximum amount you are eligible for when you are applying for a loan. While this is done through the use of ratios, it is close if not exact to how much your borrower is willing to offer. Also, just because you are eligible for a particular amount, you do not have to apply for the same unnecessarily. It takes into account –
– Your income and the kind of loan/debt you are already paying off.
– This amount is calculated and then used with the rate of interest and time you choose to tell you how much you can afford to borrow.
These are few of the calculators that come in handy when you are looking to apply for a loan. They can be used to figure out your expenses tentatively whether it is for a home or a business loan and create a comprehensive plan accordingly.