Debt Repayment Calculator

2007-10-29 12:12:45

( Financial )



The idea of borrowing is not bad, but many borrowers get loans and later realize that they are unable to service their debts. The main cause is the lack of knowledge about the amortization amounts payable in each period and their effect on the loan balance.

Debt Repayment Calculators on the Web

Fortunately, there are some lending companies and financial consultancy organizations that have set up various types of interactive calculators for individual and corporate borrowers.

Some online calculators compute the future interest earnings and total change in your deposit account balance. Debt or mortgage repayment calculators derive the monthly or yearly amortization of your loan, as long as you supply the details of the loan terms.

How the Debt Repayment Calculator Works

You need to access a lending or finance site that feature these debt repayment calculators. You will need to fill in the mortgage amount, number of years, interest rate, and the type of mortgage.

Almost instantly, calculated values will appear, as well as the total interest you will have paid by the end of the mortgage repayment period. Some sites will provide more detailed information, such as a tabulation of each year's amortizations and the remaining loan balances.

By specifying the type of loan you need, the debt repayment calculator will give you the corresponding table of amortizations. For instance, student loan repayment programs will be shown to you if you have identified it as such.

Benefits of Using a Debt Repayment Calculator

The calculator is free for use by anyone who wants to derive loan amortization figures. You can use the calculator anytime at your own convenience. It is definitely a good idea to estimate your amortizations in advance, even before you start negotiating with the lender.

It helps you determine if you can really afford to service a debt, given the loan amount, interest rate, and payment period. This minimizes your chances of incurring a debt repayment problem or even bankruptcy in the future.

Pitfalls to Avoid in Using a Debt Repayment Calculator

The figures you derive when you use the calculator are computed based on information that you yourself supplied, so they serve only as estimates. The figures will give you a benchmark that you can use to deal with your lender's offer, but should never be used as a final basis. Remember that the figures do not include other miscellaneous charges such as points, closing costs and appraisal fees.

The debt repayment calculator does not give you mortgage repayment protection, nor does it consider your credit record. With an adverse credit record, you may not even qualify for the loan terms you want.

Be very thorough in discussing the loan application with your lender, and have him disclose all applicable fees and charges other than the interest charges.


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