There are many situations that happen that are outside of our control. These situations may require you to need a loan due to unexpected expenses. You could face high medical bills or a car that needs expensive repairs. If you are considering a personal loan, you probably have a lot of emotions about it. You probably feel nervous and worried about taking on more debt. And you may be uncertain if a personal loan is right for you. You should not enter into a loan without giving it a lot of thought. If you obtain a loan without thinking it through, you could put yourself in a financial bind. Fortunately, there are tools to help you determine if a loan is right for you. You can use a loan payment calculator to assist you to determine if you can afford a loan.
What Is A Personal Loan?
Before you can even consider using a loan payment calculator, you should understand more about personal loans. You should have as much information as you can about personal loans before you decide to obtain one. A personal loan is when a lender allows you to borrow money. The lender adds interest to the loan as a fee for allowing you to borrow money. That ‘fee’, or interest, is based on your credit score. The lender has some freedom to decide how much interest to charge you.
A lender can be a bank, traditional or online, a credit union, and even family or friends. Anyone that lets you borrow money is a lender. In return, you promise to repay the loan by making regular monthly payments for a set period of time. That period of time can be three to five years. The amount you pay each month is typically a set amount as long as you have a fixed interest rate. I go into a little more details about interest rates later in this article.
A credit card is not a personal loan. That is considered revolving debt. You have a set amount on your credit card. You can only use that much credit. Once you pay any amount of it off, you can use that amount again. That is why it is called revolving. A personal loan does not replenish. You are given a set amount and you pay it back every month. Once you have paid back all of the money, the loan ends. To get more money, you have to apply for another loan.
What Is A Loan Payment Calculator?
A loan payment calculator is a tool that is available online that shows you how much you may have to per month to repay a loan. You have to enter some information into the calculator such as the amount you want to borrow. You also must enter the length of the loan and the interest rate to receive an accurate monthly amount. This article is for personal loans, but a loan payment calculator is used for auto loans, mortgages, and many other fixed loans.
Some loan calculators allow you to enter your credit score, which means in addition to giving you an idea of how much you must repay each month for your loan, the calculator helps your determine which is the right loan for you. It can show you the different loan options for your comparison. You can also see how varying interest rates changes your monthly payment.
Where Can I Find One?
You can find a loan payment calculator on various websites, including bank websites. These types of calculators can be a loan checker for you. They can give you various pieces of information. In the section above, I talked about payment calculators producing monthly payment amounts. It shows you that the monthly payment amount decreases the longer the term of the loan. The calculator shows you the total principal of the loan. This is the full amount of the money you want to borrow that does not include the interest. The better credit you have means you can obtain a higher loan amount. You also learn the total amount of interest you pay for the whole life of the loan. When you have bad credit, you receive a higher interest rate. This means you pay more money in interest over the life of the loan.
Are There Different Types of Interest Rates?
Yes, there are a few different types of interest rates. The first thing you should understand about loan interest rates is they are based on your credit. I go into more detail about interest rates later in this article. For now, you should know that the lower your credit, they higher interest you pay. A loan payment calculator can help you determine how much interest you might pay with your credit score.
Fixed interest is when a rate is set. When a lender offers you a loan with a fixed interest of 12 percent, your interest rate remains at 12 percent for the life of the loan. This is the easiest interest rate because your monthly payments remain the same amount each month and do not change. A fixed rate is typically the prime rate with some additional percentage points added on by the lender. The prime rate that lenders use is typically based off the Federal Reserve’s prime rate. Rarely do lenders offer the prime rate to customers seeking a loan. They do offer it, but only to those with the best credit.
Variable interest means that the interest rate most likely will change. When the interest is variable, it is tied to the prime rate. When the prime rate changes, so does the interest rate. The prime rate goes up and down, so a variable rate may benefit you as a borrower if it goes down. That means the interest you are paying goes down. Be cautious when agreeing to a variable rate. It does not always work out in your favor. When the economy is in a good place, the prime rate is usually low and stays low. When the economy is not doing well, the prime rate rises.
How Do I Know If A Personal Loan Is Right For Me?
I mentioned above most people feel stress when they need a personal loan. In most cases, you need money quickly to cover some expensive you cannot afford. Many times these events are outside of our control. Even so, you should not obtain a personal loan without giving it a lot of thought. You may feel like you do not have any other options, but you might. You should consider all of your options, not just a personal loan.
While considering all of your options, you also need to determine if you can afford a personal loan. You are the only one that can decide if a personal loan is right for you. If you cannot afford to make the monthly payment, you are putting yourself in a bad financial position. You should consider why you want a personal loan.
You should think about the purpose of the loan and determine if it is a necessity. If you want to obtain a loan for a television, or new furniture, it may not be a good idea to get a loan. However, if you need a loan for medical expenses, you may need a loan. Again, you should only consider a loan if you can afford to make the monthly payments. One of the ways to easily determine if you can afford a personal loan, you can use a loan payment calculator.
It’s important that you go to the right lender when taking out a loan. Loanry can help you to make sure you’re on the right path. Put in your information below and if you meet any lender’s criteria, you may get an offer:
Does My Budget Really Matter?
Yes, your budget always matters. It is important to understand the money you have coming in every month in the form of income. It is just as important to understand the amount of money you have going out each month as expenses. The difference between the two is how much money you have left each month after all your bills are paid. Hopefully, that amount is not a negative number. If it is negative, then most likely you are not even paying your bills. Unfortunately, everything you want to do is drive by how much money you earn. That is why it is important for you to understand how much money you earn. Then you know how much money you can spend.
The good news is there are many tools available to you to help you. One of the best tools available is the internet. There are so many websites with an abundance of information. One thing you will find is a budget worksheet and calculator. These tools help you list out all of the money you are spending and look at ways to cut spending when needed. Once you know how much money you have left over each month, you can use a loan payment calculator.
This will help you find a loan that fits into your budget. Once you know how much money you have to spend, it is important that you do not agree to a loan higher than that amount. If your budget tells you that you have $150 each month, you cannot get a loan with a repayment amount of $200 per month. You are already setting yourself up for failure and a worse financial position.
How Do I Create A Budget?
Creating a budget is easier than you think. The real issue is that no one wants to take the time to sit down and work through it. It is always much harder when you look at the real numbers on paper. Even though you probably have some idea of your budget, it is not real until you see it in black and white. As a result, no one wants to create a budget. It is important to keep in mind that creating a budget puts you in control of your money, spending, and saving. If you have any goals that require money, you should start with a budget. Once you understand your budget, then a loan payment calculator helps you understand your loan possibilities.
But first, let us look at how you create a budget. You must remain realistic in your budget creation. This is something you want to maintain, so it has to be something you can continue doing. If you set unrealistic goals, or do not give yourself enough money to do the things you really want, your budget falls apart. The first step is to gather all of your expenses. Do not skip any of them. You must include everything or this process will not work.
Once you list all of your expenses, you put them into categories. You have the items that are essentials, such as rent, food, and clothes. Then you have a categories for must have items, such as utilities and car, if you need it because you do not have access to public transportation. Then you create a category of non essential items, such as television, phone, eating out, and other miscellaneous items.
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What If I Have Really Low Income?
In all budget scenarios, it is important to understand what is in the categories you created. When you are creating a budget on a low income, it is even more important. You may have to make some difficult decisions. And you also need to keep your end goal in mind. You should decide how important your end goal is to you. One thing that you may not consider to be an essential bill is your credit card payments. It is important to pay them on time and pay as much as you can. You should always strive to pay the balance in full, but if you cannot, pay more than the minimum balance. This helps to protect your credit and reduces the amount of debt you have. Even when you have low income, you cannot let those bills fall behind.
Once you have put all your bills into categories, you should take a look at each category and see where you can save money. You should do this even with your essential category. Yes, you need food, but are you shopping at the most expensive grocery stores? Are you purchasing items when they are on sale? Are you purchasing only the items you need? You should take a hard look at all the items you are buying and find cost savings.
It may seem like a daunting task but you can save hundreds of dollars per month. Once you get the hang of it, it becomes much easier. Another fast way to save money is by cutting the number of times you eat out per month. If you tend to eat out, and that includes trips to your local coffee shop, often, cut that back to once or twice a week. You will see incredible and fast savings.
If as a result of your budgeting, you may find that you have a large amount of bills you must pay down. You may also realize that you cannot get ahead of them by paying only the minimum payment per month. In these cases, you may want to consider a personal loan. If paying off all of your bills at one time frees up enough money to make a monthly loan payment, it may be a good option. You can determine how much a loan may cost per month with a loan payment calculator. It is important to make sure that you have enough money to pay the loan each month or you will put yourself in a worse position.
Does My Credit Matter?
Yes, your credit always matters. Your credit makes a difference in just about everything you do. It does not matter if you want to buy a house, rent an apartment, buy a car, or get insurance, your credit makes a difference. So, it is incredibly important to protect your credit at all costs. It is hard to bring your credit up once it starts to decline. First, let us talk a little bit about what is credit.
Your credit score is an indicator to lenders how much of a risk you are. The lower your credit score, the more risky it is for them to loan you money. Your credit score is a three digit number that appears on your credit report that indicates how well you use your credit. If you have a low credit score, it is often because you have missed payments or late payments. A typical credit score ranges from 350 to 850. Most have a credit score somewhere between 600 to 750. Good credit ranges from 670 to 800. Anything below 570 is usually considered bad credit.
When you have bad credit, it is much harder to get a good interest rate. You may find it is difficult to be approved for a loan. If you are concerned about your credit score and how it impacts your ability to obtain a loan, you can use a loan payment calculator. This tool shows you what type of interest you can with your credit score. It also shows you how much your monthly payment is based on the interest charges.
What If I Have Bad Credit?
You already know you have bad credit, so what does that mean for you? It means that you are going to have a higher interest rate for your loan. Also, it means that you are going to pay more per month to pay back the loan. It may mean that you have a difficult time getting approved for a loan. It also means that you must do some research to find a loan that fits your needs and budget. The good news to all of this is thanks to the internet, that research is easier.
There are many tools available to you to help you in your search. One of those tools is a loan payment calculator. You can enter your credit score and it provides you banks and the interest rates they most likely will offer you. While you may find that the loan repayment amount is higher than you want to pay, you know immediately what options are available to you.
The more you know, the better positioned you are to make good decisions moving forward. A loan payment calculator can assist you with that. Fortunately, you can find them quickly just by doing an internet search. Many bank websites offer them as one of their financial tools. It may seem surprising to you, but lender want to help you help yourself when it comes to lending. They want you to find the answers you need so when you come to them, you are prepared. Not only does it benefit you, but it helps them, too. Before you decide on a specific lender, you should see what types of tools they can offer you on their website and in the bank.
Can I Repair My Credit?
The good news is yes, you absolutely can repair your credit. The bad news is it is not a quick fix. It takes time and consistency to improve your credit score. It goes down fairly quickly but does not come up as fast. The first thing to do is to pull your credit report. You are able to get one free one per year and you should take advantage of it. Your credit report shows your entire credit history. Review it and look for errors.
If there are errors on your report, you should correct them immediately. This can help your credit score increase. After you have corrected all the errors, now you must start making payments on time and in full. As I mentioned above, one of the top reasons for a decreased credit score is late payments. Now, you should make sure you pay everything on time. Even if you can only pay the minimum amount, pay that on time.
Sometimes a personal loan is the best way to improve your credit. It allows you to make regular monthly payments on time which can boost your credit score. You can use a loan payment calculator to determine what that payment amount may be. Keep in mind, if you have bad credit, you have a higher interest rate, which means you have to pay more per month. You have to determine if taking out a loan is something you can afford to repay. Using a loan payment calculator can assist you when making that decision.
Are There Loan Alternatives?
You may have alternative options to obtaining a loan. Unfortunately, most of them are not fast. So, if you need cash right away, they may not be able to meet your needs. You can borrow money from family and friends. Usually, they do not charge you interest or do not charge you as much interest as a traditional lender. You can work hard to reduce your spending significantly which frees up money to pay the bills that are essential. You can get a part time job to bring in some extra money to pay the essential bills.
Many of us want instant results and when it comes to money, few results are instant. It takes time to build credit. Likewise, it takes time to improve credit. It takes to pay off debt and save money. You must start with the end in mind. Is your goal to get out of debt? Or is your goal to save more money? Is your goal to pay for an emergency repair? Determine that first and then work from there. If you decide to obtain a loan, use a loan payment calculator first to get an idea of how much that costs you per month.
I talked a lot about finding a loan payment calculator online. They really are easy to find with a quick search. You can use more than one to see if you get the same results. Once you have found out the numbers from a loan payment calculator, it is time to really think about is this the right move for you. Once you create your budget and determine how much money you have each month, you know how much you can afford to pay. It is fairly easy to tell if you can afford a loan. If you cannot afford to repay the loan, do not get one.
It is really that simple. It may not be what you want to hear, but it is the truth. If you cannot repay it, you will miss payments or make them late. This impacts your credit. Your credit declines and collection calls might start. It puts you in a bad place financially and that really is not where you want to be. Make smart decisions about obtaining a loan. If the numbers tell you that you cannot afford one, do not pursue it. You should find other ways to bring in more money.
Julia Peoples is a long-time business manager focused on providing decision making assistance to the public. She works with people at key points of their lives who are making important retirement and financial decisions. She has had many articles published that educate the public on sound financial decision making.
Julia writes for those who are working towards financial freedom or a better understanding of how finances work. She has shared her financial insights with individuals on a one on one basis for years.