Calculating in advance what a loan can cost us is vital to know how to compare various offers and choose the best personal loans . In many cases, a lender may present you as your best option, but you must verify it yourself through your own calculations. In this way, with a personal loan simulator you will know if the offer really suits your needs.
Through a personal loan simulator you can calculate the real cost of financing, including your monthly fee and applicable commissions . So you can have a clearer idea of what you are going to pay.
Loans or personal credits allow us to carry out projects such as buying a new car or taking a dream trip. However, even if we know how to manage money , unexpected situations may arise that motivate us to apply for financing.
Today, the offer of personal loans and credits is very extensive and varied. In this way, it is important to analyze the possibilities well and compare them, before deciding on an online loan that suits your needs. Do you know how to calculate the monthly payment of the loan you want to request?
Why use a loan simulator?
One of the greatest advantages of the loan simulator is that it will allow you to know all the details before choosing the ideal loan . What is this for? This way you can calculate the monthly fee for the offers you receive and plan your monthly budget to assume a debt.
Other advantages of using a personal loan simulator are:
- It allows you to recognize if the personal loan has variations in the interest rate.
- You will be able to see the monthly payment that you must pay and the remaining capital.
- You can simulate the amortization of your personal loan and choose if you prefer a constant or decreasing installment.
- It shows how the Annual Equivalent Rate (APR) influences the monthly payments over time.
- You can insert different variables at the same time and see how they affect the amortization of the personal loan.
Our simulator is totally free and will allow you to analyze the offers of different lenders or banks, as long as you know the APR they handle. This tool is very effective and will help you to compare different options to be sure that you will choose the best one.
How a Loan Simulator works
Calculation time: 3 min
Suppose you are thinking of buying a car. To calculate your personal loan you must take into account the following steps:
- Choose the amount and the Interest Rate
From the personal loan simulator located at the beginning of this page you can fill in the requested fields. Let's try a loan of 5000 us dollars.
This step is often confusing, especially when choosing between the TIN and the APR. On the one hand, the TIN (Nominal Interest Rate) is the percentage that the entity charges for lending you the money.
However, in a personal loan there are more associated expenses that are included in the APR (Annual Equivalent Rate) . This variable, in addition to containing the TIN, includes the expenses and commissions associated with the operation. So what do we introduce in this field?
It is always better to enter the APR , to have a more accurate view of what our monthly fee to pay would be. Remember that on our website you will find the estimated interest rates for each entity, although for this example, we will put an interest of 6%.
- Determine the Term in which you will pay your monthly fee :
The payment term is the time in months or years in which you are going to repay the requested loan. In the case of a loan to buy a car , you can start calculating based on 5 years (or 60 months), a standard period for this type of financing.
However, this simulator is used to calculate long and short-term personal loans , since you can choose to have the repayment made in days, months or years.
- Fixed or variable interest?
Something very common when applying for financing is to consider whether it is better to choose a fixed or variable interest rate . There is no single answer, since the variable interest rate changes based on the Euribor index. In times of unstable global economy, where increases in this index are expected, it is best to opt for a fixed interest rate, which is the one we will take in this example.
- Includes Commissions in the Loan Simulator
All the data you need to perform these calculations will be available in the proposal that the bank or borrowing company has sent you . In the next drop-down you have several different answers, but for this loan simulation we will mark the option without commissions.
- Analyze and compare the offers of your Personal Loans
In this case, with an interest rate of 6%, you will see that the resulting monthly payment is € 96.66, while the total interest, which you will have paid to the entity after the 60 months or 5 years that the return lasts of the loan is € 799.88.
In this way, the personal loan simulator allows you to know, month by month, the corresponding installment, but you can also see in detail what each installment is made up of . Note, in the amortization table, that the interest and principal fields are not constant throughout the loan.
Why? Because, according to the French amortization system used in the United States, during the first phase of the life of the loan , a greater amount of interest is covered than capital . Thus, while the interest portion decreases, the principal portion increases, but always adding the same amount to the monthly installment.
What factors influence the results of the loan simulator?
One of the main objectives of a loan simulator is that you can find the combination that works best for you to return the money without problems. Therefore, it is important that you know what can influence a financing to be profitable or expensive:
Term for the return of the monthly fee
If you try several repayment terms in the personal loan simulator, you will see how the amount of your monthly payment affects so that you choose the most convenient option for your current situation. Normally, the shorter the repayment period, the higher the monthly installment to pay, but the total interest generated will be lower and vice versa.
Interest Rate of your Personal Loans
We all want to find a cheap personal loan . However, this will depend on many factors such as your credit history or your presence on a delinquent list. If you have a record of non-payment, it is possible that they will approve your loan, since in the market you can find entities that grant loans with Credit Checker , but applying a high annual interest to compensate.
Commissions of a Personal Loan
It is important that you identify which are the fixed or variable commissions included in the APR, so that you request this information from the bank or lender before including them in the personal loan simulator.
- Study Commission : this is a fixed commission that is charged only if you are granted the loan , for the fact of having examined your solvency as a client and creating your financial profile.
- Opening Payment : it is an administrative commission charged for opening your file when granting a credit or loan.
- Amortization or Early Cancellation: when a mortgage or other personal loan is canceled , you will have to pay this type of commission. Unlike the previous commissions, this one is variable, since it is calculated based on the interest that would have been generated on the debt, in case the loan had met its original repayment term.