How to calculate interest on the loan?

 

You can find real, credible “free loan” offers. Often they are only directed to new customers and in their case we give back as much as we borrowed. There is no interest, commissions or additional fees. However, if we are interested not in a loan company but in a bank loan, we must be prepared for the fact that the total cost of the loan will be higher than the capital obtained. Just how to calculate interest on a loan to know how expensive a given loan will be for us?

What determines the amount of interest?

What determines the amount of interest?

Before we get into how to calculate interest on a loan, it is worth considering what the amount of interest depends on. When we think about interest and the cost of credit in general, we usually focus on interest. In fact, it can be the lion’s share of the fees associated with a given commitment. However, one should not forget about other costs, which may prove decisive when determining the level of profitability of a given loan.

The amount of interest will depend on such factors as:

  • repayment period
  • interest rate
  • amount of credit
  • method of calculating interest
  • calendar for calculating interest.

In addition, the following is also taken into account when calculating the total cost of credit:

  • amount of commission
  • additional fees (for example, insurance).

The longer the loan repayment period, the greater the interest and its total cost. This is due to the fact that with long-term loans the amount of outstanding capital decreases more slowly, so the amount of interest accrues on higher amounts.

Obviously, the higher the loan amount, the higher the interest will be. On the other hand, the matter of interest calculation is less obvious, and more specifically: whether the interest rate is variable or fixed.

In the case of a variable interest rate, the interest rate consists of two components: the variable interest rate and the bank’s margin (which is the bank’s main source of income from granting a loan). During the repayment of the liability, the bank will periodically send new repayment schedules, along with the change in the interest rate. The variable interest rate is mainly used for mortgage loans, ie long-term liabilities. In this way, banks protect themselves against potential losses related to changes in average interest rates over the years.

Fixed interest rates remain, as the name implies, the same amount throughout the loan repayment period. Fixed interest rate is most often found with short-term consumer loans, because it is unlikely that there will be big fluctuations in interest rates during this time, so it is not a big risk for the bank.

Calculation of interest

Calculation of interest

Not everyone is aware of the importance of calculating their calendar when paying interest. The amount of interest in a given month, and consequently also the amount of the installment, depends on how many days there were.

More days means higher interest, so in the case of long (31-day) months we will pay more than in the case of short (eg 28-day) months. In addition, it is worth knowing that when making its calculations, the bank takes the length of the year as 365 days.

How to calculate interest on the loan?

How to calculate interest on the loan?

You can calculate interest on the loan in two ways – manually or using online calculators. Almost nobody uses this first solution because it requires the use of complex mathematical formulas. The second option is much faster and easier to perform.

All you have to do is enter all the necessary information (loan length, capital, interest rate, etc.) into one of these calculators and you will be able to enjoy the result immediately.

It is worth remembering, however, that for various reasons the amount we will see in such a calculator may be slightly different from the one that the bank will actually calculate. Therefore, it may be a good idea to use the calculator that is available on the bank’s website we chose – in this way we should get the most precise result.

Alternatively, instead of calculating the interest or cost of the loan, we can simply pay attention to the APRC (Real Annual Interest Rate), which banks and loan companies are required to provide in all their offers. Importantly, the APRC takes into account not only interest, but also the other costs mentioned above, such as commission or additional fees. It is a percentage of the total loan amount given on an annual basis. The higher the APRC, the less profitable the loan is.

 

 

Pre-granted credits: what they are and who gives them

With the arrival of the holidays, or other dates indicated in the calendar, there are bank customers who receive a notification informing them that they have at their disposal a certain amount that they can access quickly and comfortably just by making a couple of steps. It is what is known as pre-granted credits. They are designed for customers without defaults in their financial history and who need money for an unforeseen event, to pay for a trip, to face a small home renovation or the purchase of an appliance.

 

What happens when a client requests a normal loan?

loans

In the case of preconceived loans, it is the entity itself that offers them. But not to anyone. In order for banks to offer their customers a preconceived loan, they must meet a series of requirements. The ones that most financial institutions usually demand are, in broad strokes, the following:

  1. Take time linked to the entity.
  2. Have an impeccable credit history.
  3. Not having discovered the credit card.
  4. Have your payroll, several receipts or have bank cards.
  5. Availability of liquidity.

In summary, they are offered to clients that the entities consider model and that they suppose will not have problems to return them.

The amount offered is usually customized for each client according to the studies that the bank has on its financial history. The interest rate is usually around 10%, that is to say higher than that of a normal loan, although, like the amount and the term to return it, it depends on each client.

The one that is pre-granted does not mean that the bank finally gives the loan to the client. It may happen that once the application has been studied, the entity denies it if in recent months the client has had trouble in dealing with some payments or if the liquidity of his account has decreased.

Given the possibility of contracting a pre-granted loan, it is convenient to have clear the pros and cons before.

 

Advantages of pre-granted credits

Advantages of pre-granted credits

  1. The client has the necessary amount in a short period of time.
  2. The procedures to obtain them are easy since the bank has a previous study of the client. Sometimes you can hire from the entity’s website or from ATMs.
  3. They have no purpose. The money can be used for whatever the client wants.

 

Disadvantages of pre-granted credits

Disadvantages of pre-granted credits

  1. You have to be a client of the entity.
  2. They have more interest than normal loans.
  3. They are not granted to people with liquidity problems.
  4. Customers who do not have a good credit history are excluded, that is, they have been late in paying their credits or bills.
  5. It can be denied at the last moment even if it is the entity itself that has offered it.

If you need quick money to deal with an unforeseen event and your bank does not offer you a pre-granted loan, one option is to go to MoneyHold Finance, where you can get it in a simple way. In addition, you will not have to meet many of the requirements requested by financial institutions to grant this type of credit.

Check who offers a simple cash loan based on a specific work contract

 

Each bank offers various credit products that enable you to borrow the amount you need. Borrowers can easily find an offer that will allow them to take a loan for USD 100,000 or more.

In principle, everything depends primarily on the creditworthiness of a particular borrower. The duration of the loan agreement is important here. The longer the loan period, the lower the monthly installments and the smaller the impact of the loan on the customer’s creditworthiness.

Of course, signing a loan agreement for larger amounts requires slightly more complicated formalities.

Documents for credit

Documents for credit

It is worth remembering that the required documents with a simple loan above a certain limit require the consent of your spouse, and additional security, which depends on the bank. The most common practices are guarantees of the residents or securing the loan amount on the mortgage of the property belonging to the borrower.

In some banks, a deposit for a certain amount is a sufficient collateral. When applying for a significant loan, it is worth checking for yourself to what extent the requirements for borrowers differ.

Simple or cheap?

Simple or cheap?

Some people think that there are no “unpredictable expenses” but only “unreasonable people”. Everyone can apply for early financing of sudden needs, regardless of the amount of monthly income. When money is needed, it is difficult to find a simple cash loan. When looking for quick money, customers have to pay more for each dollar borrowed. It is worth considering your financial situation when you do not need a loan.

A careful analysis of the bank accounts offered by various banks shows that most of them have specific profits. Some solutions can be used to cover sudden financial needs. Having a bank account we can have a debit limit assigned to a specific balance or the bank can issue us a credit card.

Loan period

Loan period

The loan period may last up to 8 years. The maximum loan amount may be USD 20,000. Bank customers have access to a lower interest rate and have to do less formalities. A serious problem that prevents you from getting the money you need is excessive debt. Banks do not want to lend additional funds to customers servicing too many monthly installments.

The only solution is consolidation cash loans, thanks to which you can restructure your debt and gain additional funds for current expenses. Such loans are offered by all banks, but they are worth checking in detail. The right choice depends on how much the monthly burden on our budget decreases in connection with servicing the total debt.

How to borrow money cheaply bank or parabank?

The success of a financial institution largely depends on the competence of the advisers employed and their willingness to actually help clients. If anyone is interested in a cash loan for any purpose, then advisers will analyze their situation and tell you what credit they can actually count on.

Some potential borrowers go to the bank after checking their situation, in which the cash loan installment calculator is very helpful. At present, the bank has an attractive interest rate loan in two variants: as a standard cash loan and mega loan. In 2018, both are offered as a cash loan with a low margin.

What does the bank propose?

What does the bank propose?

The bank proposes a favorable interest rate, which is up to 36 fixed monthly installments, and in the case of loans over 36 months can be variable. The amount of the loan in the standard version is from 1,000 to 50,000 USD, and in the mega version from 20,000 to 100,000 USD without collateral. Real estate is required but it is not a security.

Both loans are offered without guarantors. Money can be obtained during one visit to the bank, immediately after the conclusion of the applicable contract. The bank lends money for any purpose. The maximum loan term is 5 years for the standard offer and 8 years for the mega loan.

The use of the bank offer is very simple. All you have to do is fill out the form on the bank’s website and the adviser will call you back and help you tailor the offer to the borrower’s needs and capabilities. These types of activities are already becoming the standard in the functioning of financial institutions. Thanks to this, customers are not left alone when making decisions.

With the support of advisers, they can choose the product that is closest to their needs, expectations and possibilities. Customers never know the bank’s offer as well as its consultants. No leaflet or advertisement can replace contact with a living person.

We choose a good loan

We choose a good loan

Today’s market is packed with companies and individuals who offer instant financial assistance. So if we do not meet the credit conditions set by the bank, then there is nothing else to do but use the option that allows quick loan via the Internet, ie Payday loan.

Companies are constantly outdoing their offers, making them more attractive. Therefore, before we decide on one of them, we should conduct a thorough research and determine what offer will be the most suitable solution for us.