Calculate loan repayment

3 Simple Steps to Calculate Loan Re-payments on Your Own 

July 12, 2022 • 197 views

A basic understanding of how your repayment options are calculated is a must. By doing so, you can ensure your monthly borrowing won't come as a surprise or force you to look for additional funding. Let’s outline the steps you need to take to accurately determine your loan's monthly payment. You can also use the Loan Repayment Calculator which is also known as the Business Loan EMI Calculator or Personal Loan EMI Calculator to make this process a breeze.  
 
You must plan your loan if you want to borrow effectively and efficiently. This entails being aware of the amount you require, the tenure you are comfortable with, and the EMIs you can afford. For all borrowers, careful loan planning is essential because it can be extremely beneficial. When done correctly, it can save you from making frequent and expensive mistakes in addition to saving your money on interest. The Business Loan EMI Calculator is one of the best tools for this planning procedure. With it, you can quickly determine your Business Loan repayment schedule online and compute the interest that must be paid. However, you can also calculate the repayments on your own.  
 

How is a loan payment calculated?

Step 1: Identify your loan type and loan payment schedule by figuring out if you would like to go for an interest-only or an amortized loan? 
 

What is an Interest-only Loan?

An interest-only mortgage is a type of financing option in which the borrower is required to pay only the interest on the loan and make no principal payments. The principal is repaid in subsequent payments. Interest-only mortgages reduce the required monthly payment by excluding the principal portion from a payment. 
 
 
Example: Consumers use Interest only loans to buy a property, have more cash flexibility, or reduce overall expenditures if finances are tight. 
 

What is Amortized Loan?

An alternative loan type is an amortized loan. These loan choices cover both the principal sum and the interest over a specific period. Payments made under an Amortized loan require you to first pay off the interest and then the remainder helps reduce the principal amount.  
 
Example: Auto loans, Home loans, Personal Loans, Student loans, Debt consolidators, and traditional fixed-rate mortgages.

 

Step 2: Calculate the Loan Payment Estimates 

Calculating your loan payment can be tricky so let’s start with an illustration:  
Supposing you put down ?1000 and are approved for a vehicle loan for ?10,000 with a 5-year term and an annual interest rate of 7.5%.  
Now, to calculate your monthly payment, use this formula: 
A = P (r (1+r)^n) / ( (1+r)^n -1 ) 
 Start by placing the numbers in the values given above. Here is a description: 

  • A = Periodic payment amount 
  • P is the loan's initial principal amount (in this example, ?10,000) 
  • r = Interest rate per period (7.5 percent divided by 12 months in our example). 
  • N is the overall number of payments or periods. 

  
Knowing this will help you to choose the appropriate loan type based on your monthly payment capacity. Before choosing your loan, be sure to try the Business Loan EMI Calculator. You can also discuss the advantages and disadvantages of these loan types in person or visit the Poonawalla Fincorp website from the comfort of your home. 
 
Step 3: Use the Loan Repayment Calculator for Accuracy.
Use an online loan repayment calculator as a third and final step if the first two processes caused you to break out in stress sweats. Simply check that you're entering the correct values in the appropriate fields. This Poonawalla Fincorp Business Loan EMI Calculator can handle the difficult calculations for you or your calculator but understanding how the arithmetic works over the loan term helps you make better purchasing decisions. 
 
Moreover, by following these three simple steps and using the Loan repayment calculator, you can easily calculate the amount of loan repayment without any hassle. 
 

How to save interest on your loan?

Yes, there are many effective ways to lower interest rates so you may reduce the cost of your loans and the total amount of interest you pay throughout the loan tenure. Here are some of our easiest advice for obtaining a discounted rate: 
 

  • Smaller financial institutions offer cheaper interest rates on a variety of loans such as Business Loans, Equipment Loans, Personal Loans, or Mortgage Loans. It might require some extra effort to find a local bank branch, but the value saved can be significant. 
  • Paying off your debt, whether it came from a Credit Card or a Government Loan, will enable your credit usage rate to drop, which will eventually cause a rise in your credit score. 
  • The monthly automatic payment of funds is a great way of ensuring minimal interest. Set up auto-pay for your Personal Loan, Auto Loan, Mortgage,  Business Loan or Professional loan. Autopay reduces any chance of hidden charges as the payments are more likely to be made on time. 
  • Bad credit ratings mean longer loan procedures. Begin by making up any overdue payments, maintain a credit usage ratio under 20%, and review your credit report for inaccuracies. Having a high credit score is one of the best methods to ensure a cheaper interest rate. 
  • Consolidate your loan. If you have several loans, you might be able to save money by consolidating them into one loan with a lower interest rate. 
  • Transfer loan. Sometimes it is worthwhile to quickly calculate how much you will save by transferring your loan account if you are receiving a loan from another lender at a lower interest rate. 
  • A larger down payment made while applying for a loan can lower the principal amount resulting in a lower interest rate and EMI payments. 

 
To help you make decisions based on solid information, we offer a loan repayment calculator. You may determine your EMI using a Personal or Business Loan calculator based on several different circumstances. The right EMI can be determined in a matter of seconds and is completely free. Given how crucial it is to borrow sensibly, our digital solutions are designed to make borrowing easier. Join us at Poonawalla Fincorp and use the Loan Repayment Calculator today.

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