Learn how to calculate a loan and find out what is the monthly payment that is best for you to pay less interest. In fact, if you learn how to calculate share your loan you will repay the loans in the shortest possible time, saving in interest and without losing economic stability.
What is the rate of each type of loan?
Depending on the credit we hire, the reimbursement method will be one or the other, so the amount of the monthly payments and the way to calculate your cost will vary. Therefore, before calculating the loan installment, it is necessary to know in what way and in what approximate period of time each type of loan is amortized:
- Minicréditos: they are loans with which we can get between 50 and 1,200 euros to face small contingencies that may arise. They are reimbursed in a single installment at the end of the agreed term that usually does not exceed 30 days. The refund will consist of the requested capital in full plus the interest generated. That is, if we request 100 euros for 30 days with a daily interest of 1.1% per day, 33 euros will be generated in interest and we will have to reimburse 133 euros in total.
- Personal loans are larger loans with which we can get a capital from 3,000 euros. As it is a higher capital the repayment term is higher, between a few months and several years depending on the amount requested. To return it, the installments will be monthly and consist of part of the capital and part of the interest generated. Its cost ranges between 6 and 12% APR.
- Credit cards: allow us to get money on credit and reimburse it or in a single installment at the beginning of the following month made up of all the capital used the previous month and without having to pay interest, or reimbursing it in monthly installments with an interest that goes around between 12 and 29% APR.
According to our financial needs and how we want to reimburse the capital that we have requested, we will have to resort to one type of financing or another. It is important to carry out one or more simulations of the capital that we want to request different monthly payments in order to calculate in a more objective way which one will best suit us.
How to correctly calculate the share of a loan?
Choosing the loan installment we have hired may seem like just one more step. However, calculating the loan installment that best suits us is not as simple as it seems. It is important to choose a short repayment period, as this will generate less interest, however, if the term is too short the fee may be too high and we run the risk of our economy becoming unbalanced.
It is considered a good quota that will allow us to achieve the shortest term, without endangering the balance of our economy when the percentage of our salary dedicated to the repayment of the credits does not exceed 35% – 40% of this. That is, if we charge 1,000 euros net, it is not recommended that the monthly payment exceed 350 – 400 euros. Anyway, each personal situation is different and it is important to value all the options before deciding on one or the other because the higher our income, the more we can devote to repaying the loans without unbalancing our economy will be higher.
In any case, it is advisable that we use the loan calculator, which will perform the equation instantly and automatically and in that way, we will know with total security all the data and we will be able to assess whether it is advisable or not to hire is based on the price of the financial product. let’s be studying
How does the term affect personal loans?
The interest that they apply to us, the amount of money that we request, the linked products included in the creditor the associated commissions are some of the factors that influence the cost of the loan that we request. However, there is one that decisively affects the price of loans and that is not usually taken into account: the repayment period.
The longer we take to return the money they lend us, the more interest is generated, so the amount that will have to be reimbursed will be greater. Therefore, it is advisable that we always choose a short-term that allows us to pay an affordable fee. To see how the repayment period affects the cost of the loans, in the following table we show the interest generated by a loan of 10,000 euros to 7.18% TIN with several repayment terms:
|Quantity||Interests||Term||Monthly fee||Generated interests||Total to pay|
|€ 10,000||7.18%||12 months (1 year)||€ 886.10||€ 393||€ 10,393|
|€ 10,000||7.18%||24 months (2 years)||€ 448.54||€ 765||€ 10,765|
|€ 10,000||7.18%||36 months (3 years)||€ 309.59||€ 1,145||€ 11,145|
|€ 10,000||7.18%||48 months (4 years)||€ 240.30||€ 1,534||€ 11,534|
|€ 10,000||7.18%||60 months (5 years)||€ 198.86||€ 1,932||€ 11,932|
|€ 10,000||7.18%||72 months (6 years)||€ 171.36||€ 2,338||€ 12,338|
As we can see, there is a big difference in the interest generated according to the monthly payment we pay. However, the monthly payment that we choose should be consistent with our income to avoid over-indebtedness.
Ways to repay loan installments
There are several ways to reimburse the capital of credits and accrued interest: by direct debit, paying with a card, with a transfer … Many entities have a predetermined method, but some will give us the option to choose the one that we find it more comfortable. Let’s see what are all the payment methods:
- Bank transfer: this is the most common way to repay loans granted by private equity entities. We can do it through online banking or in any office of our bank. Simply we must indicate the account number of the lender and detail the data identifying the payment in the concept.
- Cash payment: this form can be one of the repayment options of the mini online loans. To return the credit in case we must go to the entity where the lender has the account and make the deposit in your account. In this case, it is essential to correctly identify our payment.
- Domiciliation of the quote: it is the most common option to reimburse the largest personal loans. As if it were an invoice, the amount of the monthly installment of the credit will be automatically deducted from the current account that we have indicated.
- Card reimbursement: it is not a widely used alternative yet. As if it were an online purchase, we can reimburse the mini-credits through the lenders’ platforms with our debit or credit cards.
The most appropriate way to get out from under payday loans will be payday loan consolidation.