You’ll probably need to take out a loan at some point in your life. Borrowing money to finance your goals is part of life, and there will be situations when you need more money than you have in savings. A loan is an excellent option for those wanting a ready source of cash and is much better financially than relying on a credit card. Typically, loan interest rates are considerably lower than purchases made via credit cards. Using a loan calculator can help you decide whether the loan you’re considering is well-priced and suitable for you.
Online loan calculators offer ease and convenience as they do all the hard work for you. Best of all, you don’t need to be a financial expert to determine how an online loan calculator works.
Why do you need a loan?
There are several reasons you may need a loan. Here are the most common:
- Buying a home
- Buying a car
- Buying a caravan
- Financing a home renovation
- Consolidating debt
- Starting a business
- To pay unexpected expenses
Why use an online loan calculator
An online loan calculator is a valuable tool that allows you to determine the amount of money you can afford to borrow. By altering the loan amount, loan term, payment frequency, and interest rate, you can clearly understand how much you can afford. An online loan calculator will display the monthly payments required on different types of loans, including mortgages, car loans, personal loans, and other loan types. When applying for a loan, you must consider any fees you may be charged for mortgages and different specific types of loans.
While an online loan calculator will show your monthly repayments, securing a loan depends on several factors, including your credit rating and personal circumstances.
Credit rating basics
Securing a loan is often dependent on your credit rating. Your credit score is a measurement of your creditworthiness. It tells financial institutions (lenders) how risky or safe it is to lend money to you. Your credit score is based on your financial history and ability to repay debt. Typically, the better your credit rating, the lower the interest rate on your loan. The higher the number, the better your score. However, even with a good credit rating, check that your interest rate is appropriate. You can run the risk of being targeted by subprime lenders, resulting in you not being offered the rate for which you’re eligible.
Secured vs. unsecured loans
If you are confused by the difference in interest rates between personal loans, mortgage, and car loans, it comes down to secured versus unsecured loans. Home and car loans generally offer lower interest rates than personal loans. These lower rates are due to the loan being secured by the collateral of the house or car from which you are buying.
From a lender’s perspective, personal loans offer no security, meaning that if you default on your loan (can’t make the repayments), the bank or lender has nothing tangible to foreclose on or repossess to cover your debt. These are known as unsecured loans. Unsecured loans typically attract higher interest rates.
Factors affecting loan interest rates
Loan interest rates fluctuate according to several factors:
- Overall economic environment as set by the central bank
- Loan length, with longer loans carrying higher rates
- Your credit score, riskier borrowers attract higher interest rates.
- Whether the loan is secured (backed by collateral) or unsecured.
How much can I afford to borrow?
As a rule, the goal is to comfortably cover the monthly loan payments, including principal, interest, and any applicable fees, with your current income. In general, guidelines recommend you spend no more than 30% of your gross (pre-tax) income on a mortgage and 10%-15% on a car or personal loan.
What are the benefits of using a loan calculator for personal loans?
There are many benefits associated with using an online loan calculator.
Allows you to alter the interest rate and see how much this affects your repayments
Changing the interest rate allows you to determine how much your repayments will change should interest rates increase. As we have seen over the last few years, interest rates can vary significantly, and our online loan calculator shows you immediately how this could affect you.
Helps with managing your finances
If you need help organising your finances before applying for a loan, an online loan calculator can help you effectively plan. Once you have entered all the details and the calculator displays the projected repayments, you can choose whether the loan is suitable. This knowledge allows you to decide how to allocate your funds, letting you plan your finances well to meet other essential costs.
Gives insights into monthly repayments
Knowing your monthly repayments is the first step toward choosing the best loan for your home, car, business, or renovation.
Use the Yes Loans finance calculator for Personal loan calculations, Car finance calculations, Business loans (such as Chattel Mortgage, Commercial Hire Purchas), Caravan loans, Boat loans, Motorbike loans, and Secured and Unsecured loans.
Choose Yes Loans for your online loan
Talk to Yes Loans to learn more about our fast, efficient personal and car loan options. The sooner you apply, the sooner you’ll have the money! Our personalised loans come with a range of options and loan protection insurance.
Yes Loans can provide you with the financial loan you require, so we can help get you money fast. Call us today.