💳 Loan Calculator

What Can Be Calculated With a Loan Calculator?

• Loan installment
• Loan term
• Interest rate
• Maximum loan amount

The loan installment is by far the most frequently calculated value. To determine it, simply input the desired loan amount and loan term. The result will show the monthly payment, factoring in the interest rate. This represents your financial burden and should not exceed your available income.

You can also calculate the loan term. This helps you figure out within what period you could repay the loan with a given monthly installment.

Calculating the maximum loan amount can also be helpful. If you want to buy a new car, for example, and wonder which model you can afford, simply input the loan term and monthly payment. The loan calculator will tell you how much you can borrow based on these parameters.

Key Loan Parameters and What They Mean

When calculating a loan, there are several terms and key data points to understand. Let’s go over them in more detail:

• Loan Amount (Financing Amount): The amount you want to borrow. For most consumer loans, this typically ranges from €3,000 to over €100,000. For personal loans, it is often between €3,000 and €50,000.
• Monthly Loan Installment: The amount you will pay back to the lender each month. It is a combination of the principal repayment and interest. Additional fees or insurance premiums are not included in the installment. Typically, this installment remains the same throughout the loan term.
• Loan Term (in years): The duration over which you will repay the loan. Loan terms usually range from 1 to 7 years and are primarily based on the loan amount.
• Nominal Interest Rate: This is the interest rate charged by the lender, excluding any additional costs or fees. It represents the base cost of the loan.

When Should You Take Out a Loan?

Taking out a loan is relatively easy these days, but it’s not always necessary or advisable. You should consider a loan primarily if you need a significant amount of money and don’t have access to it elsewhere.

For example, if you have savings in a bank account or a savings account, it might be better to use that money instead of taking out a loan. Savings usually earn lower interest compared to the cost of borrowing. It’s not economical to keep savings earning 1.2% interest while paying 3.5% interest on a loan.

In many cases, a personal loan is the best financing option. However, other loan types, such as a line of credit, may be more suitable depending on the situation. For example, if you expect a significant sum of money soon, such as a bonus, a line of credit might be better since you can pay it off quickly.

Other Considerations When Taking Out a Loan

While taking out a loan is straightforward, there are a few important points to consider. The loan calculator is a useful tool for determining the key parameters of a loan or comparing offers. However, if you want personalized loan offers, you will need to provide some personal information, including:

• Full name
• Address
• Income
• Occupation
• Fixed expenses (if applicable)
• Employer