How are loan repayments calculated?

To understand the calculations on the monthly repayments of your loan, the first step is to know the type of the loan. This will help you in understanding the payment schedule. By identifying the loans as amortized or interest only, you would be able to understand the calculations for loan repayment.

Next based on the type of the loan, upload the numerical values in the loan repayment formula which is customized as per the loan type. The formula is pre-fed in the loan repayments calculator.

The formula for calculating your monthly payment is:

A = P {r(1+r)n} / {(1+r)n –1}

Here, check out the values for each letter in the formula. You will have to insert those values.

  • A = Amount to be paid per period
  • P = The total loan amount or the Principal Amount
  • r = Rate of Interest per period
  • n = Total repayment periods or payment installations

How to pay less interest on your loan?

You can save a lot of money by paying lower interest rates. Now the question is how? Check out a few ways to pay less interest on your loan.

Look for Small Financial Institutions:
Generally small and local financial institutes or credit unions charge less rate of interest on loans compared to the big loan lenders. This would save the extra money.

Finish off the current Debt:
By clearing off the debts from the past and the present like the credit card, or any other federal loans would increase your credit score. The increased credit score will heed your loan with a lower interest rate.

Switch to Auto Debit:
Check if your lending institution has an option of auto pay. If there is a provision that you can set it on, This will assure the lender that the loan installment would be paid on time without any delay and the lender might reduce the rate of interest on the loan.

Enhancing the Credit Score:
This method is a sure shot guaranteed method to avail a loan at a low rate of interest. By having a great credit score. Clear off all the past debts and ensure you credit utilization is below 20% ratio. With decent credit history and good credit score the lender would reduce the rate of interest on the loan.

Why should you use our Loan Repayment Calculator?

Now that you know how to calculate the monthly payment on your loan, make sure you don’t miss a payment. Calculator will ensure that you know exactly how many months you ought to pay the loan installment and how much in precise. This would make it very easy for you to arrange and keep the amount ready.