When borrowing money becomes a big necessity, finding a lender that would give you the amount you need is not enough. Although a lender is necessary, it doesn’t disregard the fact that you should be well informed on how the figures, rates, and numbers become as they are.
Most borrowers are like you. They rely on the computations given by their lenders- for obvious reason: they really don’t know how the numbers came into being. When the lender says: 1% increase on the interest rate is equivalent to $200 annually, they really do not bother to ask since it will complicate things and they really would not understand it anyway. (Well, what most borrowers are after is the loan not and the figures right?)
What should you do then?
There are a number of options you can go to if you decide to let yourself be informed with what is happening on the figures inside your loan. One, you can always utilize online finance calculators, which are readily available online. Most can be found of lending company websites. They are free and easy to use. All you have to do is to enter the amount of loan, the interest rate, and the number of month you are planning pay the loan back.
Another is the financial calculator. Unlike ordinary portable calculator, the financial calculator lets you know the number of payments in an ordinary annuity or in a loan. It also answers the amount of payments on investment plans and loans, determines the rates of (ROI) return of investments and interest rates on loan, and determines the current and future values of ordinary annuities or cash payments. Although using financial calculator can be complicated at first, especially if you are not properly oriented with the functions of the calculator itself, it can be a good tool to make sure that you get the right information about the money you have to pay back.
Finally, you can rely to the good old ask-your-broker method. While there maybe a risk involve here especially if you are borrowing for the first time, it can make your task easier. Let your broker explain to you how much you should pay if… say to lower your interest rate by a certain percentage or shorten the term of the loan. Speaking of the risks, broker may give you wrong information about the loan and can shoot the rate up without you knowing it. To avoid this from happening, go to a reputable lender- a lender with a long and standing reputation in the industry. Also, you can confirm the rates by checking it through the finance calculator available online.
The bottom line is, your money and property is at stake here and if you are not careful enough, you will be paying more that what you should. Using finance calculator will determine if you have the ability to pay the loan, the amount you should be paying for the term, and the interest rate and how it affects the loan.
Other benefits of finance calculator:
Compare rates easily. Using finance calculator makes your lender selection easier. This is because you can ask for different quotes from different loan companies and easily compare the rates using finance calculator. Tip: Make sure that you include the points, interest rate, processing fee, monthly amortization, down payment (if necessary), when comparing different quotes.
Plan monthly payments fast. Financial calculator will give you the detailed monthly payments against the amount of loan, the interest rate, and the length of terms. The good thing about this is that you will immediately know if you can afford the monthly financial obligation imposed by the loan. Once you know your monthly payments, you can plan your finances and allocate money from your future budget.
Smart shoppers have the attention to details whatever they are buying or in this case, borrowing. You need not pretend to be one but I tell you this: whether you are smart or not, it is a very good thing that you are able to identify if you are paying the right amount. So sit down and count; after all being neglectful with the details is not worth the risk.