Personal Loan Calculator

When you need a loan for something, shopping the variety of options available to you is an important step. You know you want the best rates available and a loan that fits your family’s budget, but you may not know exactly what terms you need. A personal loan calculator is a tool to help you with your decision. As with any computer-based program, your final calculations are only as good as the data you input, so knowing the difference between online calculators is crucial.

Payment Calculator

The most common personal loan calculator available online is used to calculate loan payments. Before you apply for any loan, you should make a habit of performing this calculation. If you don’t, you run the risk of getting a loan with monthly payments you can’t afford.

For example, if you want a personal loan to purchase a car, you must know how much car you can afford. Input a few price points with a variety of interest rates and note how each change affects your payment. Spending $15,000 on a car may not sound unreasonable until you run the payments at a high interest rate of 18 percent. Use findings to shape the nature of your car search to save valuable time.

Interest Rate Calculator

A less common personal loan calculator is for finding interest rates. Use this calculator to determine the highest interest rate you can afford to pay for a loan. Simply input the amount you want to finance, the highest payment you can afford and the number of months to repay the loan. Keep the percentage it provides in mind when shopping for personal loan rates. If a lender cannot offer a rate under your maximum, don’t apply.

Payoff Calculator

The payoff calculator is the most useful of the personal loan calculators for anyone trying to eliminate their debt. This one typically has two different functions. You can enter the data on your current balances, rates and payments to find out how long it will take you to be debt free. Another function of this calculator is handy if you have a debt free timeline. Input your balances, rates and payoff deadline to determine the required monthly payments to meet your goal.

No matter what kind of loan you desire or how many debts you have to repay, using a personal loan calculator can help you make more informed financial decisions.

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Personal Loan Application Tips

Submitting a personal loan application causes apprehension in some people, especially if you have shaky credit or are unsure what’s on your credit report. Even with its polished marble floors and hushed interior, your bank isn’t a scary or foreboding place. Even if you’ve never applied for credit before, you can stride into your bank with confidence and get the money you need.

Know Your Needs

Before you submit a personal loan application, it’s smart to figure out the exact nature of your request. How much do you need? How much can you afford to repay each month? These are questions the lender will likely ask, so be ready to answer. If you can’t, you may end up with too little money to meet your needs or payments you can’t afford.

Shop Around

Your bank decade is a good place to start, but don’t forget about your other options. Check out the offerings of the other banks in town, including those that are small and locally run. Another option for your personal loan application is internet banks. Some have lower overhead because they lack a brick and mortar building and they may pass their saving onto you in the form of lower rates and application fees. Your goal is to find the most money for the lowest cost.

Stay in Control

Lenders learn early in their careers to control the direction of the conversation and get the personal loan application while you’re at the desk. Remember that this is your money and your credit, so you aren’t obligated to apply with any lender simply because you took up time to get the information you need. You decide when and if you’ll apply for a loan.

Also, keep in mind that applying for multiple loans to find the best rate is not a solid strategy. Your credit is pulled each time you apply. If you must apply for more than one loan, narrow down your options to the top two or three lenders and apply with each to minimize the inquiries in your credit file.

Be Prepared

While every lender is different, compile basic information and documentation in a folder to make the personal loan application process easier and less time-consuming. Include your social security number, gross annual or monthly income, paystubs or self-employed tax returns and employer contact information. If you’re using the loan to make a purchase, include the contract showing the purchase price. Depending on how long you’ve been with your company or at your current address, the lender may also need previous employer information or your previous addresses.

Taking the time to research companies and evaluate your needs before submitting a personal loan application allows you to apply only once and still get the best deal available.

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Personal Line of Credit

Sometimes, life throws curveballs when you least expect it, causing a need for extra cash on an ongoing basis. When you find yourself in this situation, applying for a bank loan can help fill the gap, but may not be your best option. Instead, look into a personal line of credit to meet your ongoing needs.

Line of Credit Basics

Unlike a standard loan, a personal line of credit is a lending vehicle that functions much the same as a credit card in the sense you can purchase and make payments up to your credit limit. Don't be fooled into thinking credit cards and credit lines are the same because lines of credit offer additional options to advance you money. That being said, both can fill cash flow gaps when used in a responsible manner.

Your lender approves you for the highest credit limit you qualify for under the lending guidelines. Essentially, a lender assumes you'll max out the line and sets the limit based on what you can afford to repay each month. Once established, you can draw funds from the line of credit and repay the funds based on your needs and cash flow. Because you advance funds over time, most lenders charge a variable interest rate that fluctuates with the Prime rate set monthly by the Federal Reserve Board.

Line of Credit Advantages

The main advantage of a personal line of credit is the ability to decide when and how much you borrow. Lines of credit are ideal for funding projects with undetermined expenses. If you'd used a loan, pay more monthly if you estimate too high. When the opposite is the case, you may be unable to obtain a loan for the additional funds. Using your line of credit allows you to only pay for the portion of the money you use, potentially saving hundreds of dollars in interest charges.

In addition to the flexibility provided, you can take advantage of interest rate decreases as each occurs. Depending on the terms of your personal line of credit contract, your rate may adjust monthly, automatically reducing your payments as interest rates fall.

Line of Credit Disadvantages

Economic instability is the biggest disadvantage of personal lines of credit. In a rising interest rate environment, you risk a hefty increase in interest costs and payments. Your lender may write an interest rate cap into your contract, but this can be several percentage points higher than you're comfortable paying. Regardless of the current interest rates, always consider your ability to repay your credit line at the highest allowable rate before taking the deal.

Overall, a personal line of credit is a decent borrowing option when you need increased flexibility in the way you use your loan proceeds.

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Personal Credit Management Tips

Money management is a skill best learned over time and with the benefit of those little mistakes along the way. While some have an inherent knowledge of personal credit and financial matters, the majority of people stumble from time to time. No matter which end of the spectrum you fall, you can whip your credit and finances into shape with a few simple tips.

Understand your credit report

Figuring you have plenty of time to learn about your credit isn’t the most productive approach. The saying “what you don’t know can’t hurt you” doesn’t apply to your credit score. Pull a free copy of your personal credit report from the credit reporting agencies at least once per year and make a habit of disputing incorrect information. Paying attention to your credit before you need it ensures fewer surprises when you apply for a loan.

Respect your credit usage

If you aren’t in a position to pay off your personal credit card bills each month, that’s ok as long as you plan for it. By now, you’ve already heard that the average credit card takes 30 or 40 years to pay off when you only make the minimum payments. Cash flow doesn’t always come in even batches, so making only the minimum payment on your cards may be necessity. When you know you won’t have the funds to pay the full amount, forgo making frivolous personal credit purchases. Do you really want to pay interest on fancy restaurant dinners for the next several years?

Plan for the future

Building up your savings account is the best way to avoid overextending your use of personal credit options. Create a savings plan that covers the full range of your goals. If you know you’re spending a week in Hawaii next winter, begin saving now to avoid racking up credit card charges. In addition to planned expenditures, save for unexpected emergencies. No one likes calling a professional to deal with a burst pipe, but it’s less of a blow when you can pay with cash instead of credit.

Keep credit accounts current

Devise a system to make sure you don’t forget due dates. It doesn’t matter whether it’s your auto loan, home mortgage or personal credit card bill, failure to pay on time results in late fees, negative credit reporting and potentially increased interest rates as a late payment penalty. Make a habit of paying bills early if you can. Loan companies are often more forgiving of a late payment from a customer with an outstanding payment history.

Keeping your personal credit in shape isn’t hard as long as you’re willing to work with it. A little bit of attention now can save you hundreds or thousands of dollars of frustration in the future.

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Personal Cash Loan Tips

Not every loan must come from a bank or other lending institution. Times exist when a personal cash loan between friends or family members is more appropriate than visiting a brick and mortar business. Unfortunately, mixing money and friendship can be a difficult task, even when a solid relationship is present. Whether you’re borrowing money or lending it, you can minimize the chance of friendship ending loans with five tips.

Written Contract

Borrowing $3,000 from a friend isn’t the same as using his lawn mower. A personal cash loan is a serious financial transaction requiring timely repayment and both parties should treat it as such. Putting all the specifics in writing not only solidifies your commitment to the deal, it allows no room for later disagreement about the exact terms. Make sure you include the loan amount, payments, interest rate – if applicable – and your notarized signatures.

Fair Interest Rate

It’s not just a good idea to offer a fair interest rate on personal cash loans; it’s the law. You can get an idea of the going interest rates for varying loan amounts by visiting lender websites, but keep in mind most banks must follow different rules than individuals. To ensure you aren’t charging a “loan shark” rate, find out the maximum legal rate allowed in your state and stay under it.

Responsible Repayment

Friends are often more forgiving during hard times than lending companies, but that’s no excuse for lax repayment. Treat the personal loan from a friend just as you would an obligation to any other lender. Always strive to make full payments on time, even when your friend tells you take as much time as you need. You don’t want to lose a friend over money.

Responsible Lending

If you plan to lend money to someone, make sure you can afford to be without the funds. Helping someone in his or her financial time of need is a noble deed, but overextending yourself is not the help your friend needs most. When you lend more than you can afford, you may begin asking for repayment every time you see your friend, straining the relationship. On the other hand, offering to help someone using money you don’t immediately need puts less pressure on you and your friendship.

Gauge the Relationship

Before lending money or accepting a personal cash loan from anyone, determine the nature of your relationship. Do you really know each other well enough to enter into a financial arrangement? Do you trust this person to repay the money? Are you comfortable owing money to some you know? If you cannot answer these questions in a positive manner, consider other loan options.

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