Loans can be a very beneficial tool to allow you to do things such as: purchase a house, start a business, or go to college. These items are very difficult for people with certain levels of income to pay for up front, which is where a loan comes in to play. A lending institution, such as a bank or other entity, will loan you a sum of money allowing you to make the purchase. The borrower then pays the loan back in monthly installments with interest or a fee added to the principal.
Once you know how much money you need to borrow, be sure to find a competitive interest rate to keep your payments as low as possible. You can plug different interest rates in the calculator below to see just how much more you will pay with a higher interest rate. The lender will have a contract binding the agreement, and will often times keep the title or deed until the loan is paid in full. If you default (or stop making payments) then the lending institution can take the property purchased with the loan to help pay back the money that was lent to you.
Usually at the beginning of the loan repayment the borrower will be paying a much higher percent of the interest, and much less towards the principal of the loan. This ensures the lender is making a profit for taking the risk of loaning the money. The risk is that you will not repay the loan, and the lending institution will lose money. This is why a credit score is important in whether you qualify for a loan, and what kind of interest rate you will get. This is a lender’s way of calculating the risk of loaning you money. If you are a risky borrower, then they might still loan you the money, but you will have to pay a higher interest rate or fees to get the money.
Below is a basic loan calculator that you can use to figure basic loan calculations. If you have specific loan calculators you are looking for, such as mortgage calculator or auto loan calculator please visit those pages where you can enter more specific information.
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