Online Loan Calculators and Their Features

By | November 28, 2016

When considering a financing option, be it a mortgage for a house or simply a car or a boat loan, it is important to research the future payments involved and how these payments may effect your financial position. There are now quite a few online loan calculators of various types to help give an initial indication of the feasibility of a financing option. These calculators are typically general loan calculators that make certain assumptions in their calculations. For example, some of them may assume continuously compounding interest, and some may ignore any potential tax effects of the loan. When considering a specific loan, it is always important to understand the required payments for that loan and its specific conditions, such as interest calculation methods, any specific fees or charges or conditions associated with the loan, or any tax implications of the loan. A more general loan calculator can however be useful to get an initial approximation of the feasibility of taking a loan for a given financing requirement. In this article, I am going to discuss some of the basic types of loan calculators available and some of their features.
Some of the types of calculators are as follows:

General Loan Calculator: Such a calculator is useful to evaluate the payments required for a general loan. These calculators often allow you to input the loans interest rate, the frequency of loan repayments and the payment amount or the term of the loan. They can then return factors such as the term of the loan if you input the payment amount, or the payment amount if you input the loan term. The total amount repaid over the course of the loan, the total interest that has been paid, and potentially an amortization schedule, which can break down your payments for each pay period indicating how much of the payment is reducing the principle, how much interest is paid each period and the total principle remaining for each period.
Mortgage Refinance Calculator: A mortgage refinance calculator helps give an idea of the feasibility of refinancing a mortgage. In such a calculator, you can input the principle balance of your mortgage, your current payment amount and current interest rate and any closing costs on your mortgage. You can then input a refinancing loans interest rate and term and you will see information such as what your new monthly payment would be, any reduction in your monthly payment, the net savings or costs of the refinancing option as well as how long it may take for the refinancing to break even on any closing costs of your current mortgage.
Debt Consolidation Calculator: Another type of online loan calculator is a debt consolidation calculator. Such a calculator is helpful to evaluate the option of consolidating a number of existing loans into a single consolidation loan. A consolidation loan calculator can take inputs such as your exiting loan details, including their principle balance, their interest rate and your regular payment amount, as well as your consolidation loans term, its interest rate and any consolidation loan fees. The calculator will then help determine the difference in regular payments with and without consolidating the loans as well as the time until the loans are paid off and the total cost of any interest or fees of the two options.

As stated above, such online loan calculators are typically general calculators that can give a basic introduction to how feasible a financing option may be, however specific loans often have their own conditions and other factors that mean you should always have a professional perform the calculations related to a specific financing option when at the stage of considering a specific loan.