Are you looking for the simplest way to calculate loan payoff? Awesome. This article will walk you through all the steps you need to calculate the total amount you’ll finally pay at the end of the loan period.
Loans are quite helpful. In fact, they help many people to achieve their goals. They’ve helped many in various ways, such as starting successful businesses, buying cars, completing their higher education, and buying homes.
Yes, you’ve secured a loan of your dream. But do you know how to calculate loan payoff?
Honestly, we have complicated ways out there that try to show you how to do it, but they end up beingconfusing and tiresome. Fortunately, this article presents the simplest way to calculate it.
Are you ready? Let’s go.
Look for a Tried-and-Tested Online Loan Calculator
We have many loan calculators online. Some are easy to fill the information required, while others can be challenging. You should choose a calculator that people have used and experienced. For example, you can look for calculators that are high-rated and have excellent reviews from users.
Here are some links to the best loan calculators
Bankrate.com: This is one of the most straight forward loan calculators that’ll present the full table of your loan repayment as well as remaining debt.
MLCalc: Here is another calculator that will also provide you with a full table of your loan repayment and your remaining loan debt.
CalculatorSoup: This is another great loan calculator that helps you to calculate loans with compounding intervals or unusual payments. For instance, some loans may be compounded twice a year (semi-annually). This kind of calculator assumes that the loan is compounded monthly, and also the payments are made monthly.
Alternatively, you can visit the web and download a loan calculator. Then open it with one of your spreadsheet programs like Excel.
Also, you can make your loan calculator on excel.
Open the Calculator
Now that you have your loan calculator or the link to the calculator, click to open the calculator.
You should be taken to a page that contains blank spaces for filling your loan details. These details may include the loan amount, interest, term, interest, and monthly payments.
Enter Your Loan Amount
How much have you borrowed? That’s the amount you should enter in this space. However, if you borrowed earlier and you’ve already started to pay, you should enter the amount left to finish paying.
Depending on your calculator, this field can be named differently. Some refer to it as “Loan amount” others “base amount.”But they all mean the same thing.
Enter Your Interest Rate
Which rate did your lender fix on your loan? That’s the annual interest rate (in percentage) that you should fill in this place. For example, let’s say your lender fixed a rate of 10%, you’ll type 10 in the space. Not 10%. Okay?
Don’t worry about the compounding interval. The specified interest rate should represent the nominal annual interest, no matter how frequent the interest is calculated.
Enter the Loan Term
How many years or months have you agreed with your lender to clear your loan?Type that period in the “loan term” space. Revisit the terms and conditions of your loan and use the amount of time fixed to know the minimum amount to pay each month.
Amazingly, a higher amount of monthly payments requires you to use a shorter time to pay the amount sooner. Keep in mind that the sooner you pay the loan, the less the total amount you spend in paying the loan.
Enter the start date
When did you receive the money from the lender? Enter that date. This date will be used to calculate the day you’ll finish paying your loan.
Have you confirmed that you’ve entered the correct details? Well. Click on the “Calculate” icon to calculate the loan payoff. Mostly, this button is found immediately below the details you’ve fed to the spaces.
After pressing that button, wait for the calculator to respond. Some calculators will update the payment period automatically after feeding the information. Others won’tchange anything until you hit the calculate button.
Otherwise, all calculators will give you the final report of your payment schedule in the form of charts or graphs. Here you’ll encounter two terms:
Principal: this is the original amount left to be paid.
Interest: this is the remaining additional charge you are to pay.
Look, it’s wise to pay more amount than the one displayed in the calculator. Here is the catch;if you pay more money, you’ll finally pay a single extra-small payment at the end of the period, and your total money will be less.
You know what? That’s how simple and fast you can calculate loan payoff using an online calculator.
Feel free to check out How to Calculate APR the Easy Way
Loans That can be Calculated Using an Online Calculator
Mortgage: is a loan secured to own a home.
Auto loan: a loan secured to buy a vehicle.
Home Equity Loan: loan for homeowners to perform various functions at home.
Home equity line of credit (HELOC): is a type of home equity loan but works more than a credit card.
Student loan: type of loan given to students by a private lender or government.
Personal loan: a type of loan given in lump-sum amount to be paid at a given period.
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