Loan calculator

Mar 22, 2019 Finance

Loan calculator

Wondering how to choose the most advantageous loan offer? Every day we are attacked by a lot of advertisements that encourage us to take out a loan. Especially in the pre-Christmas period, the intensity of such advertising campaigns is very high. How to choose the best one in this maze of offers? How to find out which offer is the cheapest? It’s not that simple, but the loan calculator can make things easier for us. Just enter the basic data and get an overview of the results of the loan. Of course, we can also assess the attractiveness of the loan ourselves, check what costs it involves. By reading this article, learn what you need to pay attention to when choosing the best loan offer, how to assess the costs, and how to use the loan calculator. We invite you to read it.
Loan – what is it?
A loan is an agreement between a lender and a borrower. The first party to the agreement lends the other a certain amount of money, and must be the owner of the money. The rules of concluding loan agreements are regulated by the Civil Code. A lender can be a bank or a loan company, but also a company, a business entity or even a natural person. Loans granted by banks are slightly different from loans granted by other entities. Banks act under the guardianship of the Polish Financial Supervision Authority, which by its recommendations orders them to treat loans on the same terms as loans. And these are regulated by the Consumer Credit Act.
How to choose the most advantageous loan?
How to choose the best loan offer? Of course, the best loan is the cheapest. But not always the costs of a loan – about which in the further part of the article – are the most appropriate measure of the attractiveness of a loan. Equally important is the customer service provided by loan companies or banks. To obtain information on this subject, it is worth following the Internet forums and discussion groups on Facebook. It is also very important for customers whether all the formalities related to the loan service can be done online. Some borrowers take such aspects into account first. However, if you already find a few suitable offers, you should look at the costs that will be associated with them. A loan calculator will help us with this.
Loan calculator
There are many websites on the internet where you can find a loan calculator. It is a very simple and intuitive tool that will allow us to determine the cost of the loan, as well as the amount of monthly installments. Just enter the basic data – the amount you want to borrow, the term of the loan and the interest rate of the loan. The calculator will simulate and obtain results that will allow us to assess whether a given loan is attractive for us. Not every calculator is professional enough to be worth using. You should look for those that have a user manual. An erroneous input of data may spot the results. We must also remember that the results of the calculator are only for illustration purposes. The way we interpret them will depend on the level of our financial knowledge.
How much does a loan cost
The loan calculator will allow us to estimate how much the loan will really cost us. The biggest influence on the amount of costs has the interest rate, which we have to enter in the calculator. The loan interest rate is given by lenders on an annual basis. However, it cannot exceed four times the lombard rate. The interest rate may be fixed or variable. The fixed interest rate maintains the same amount throughout the life of the loan. A floating interest rate, in turn, consists of a fixed part (margin) and a floating part. The amount of the variable part of the interest rate depends on the reference point. Usually it is WIBOR – interest rate that is used on the interbank market. Other loan costs include commission and preparation fee.
How to assess the cost of a loan?
How can the cost of a loan be assessed at first glance? A lot of information is provided by the Real Annual Interest Rate – APR. This is a parameter which is calculated equally by all entities granting loans. The APRC includes the nominal interest rate we mentioned above, as well as commissions and other fees related to the granting of a loan. It is therefore a good tool to compare many loan offers. In this way, however, we can compare offers with each other with similar parameters. The key in this case will be the amount of the loan and the duration of the loan. How else can we assess the cost of a loan? In principle, it is enough to multiply the number of installments by their amount and we already know how much we will actually pay.