Loan repayments used to be confusing and difficult to calculate. Quite a lot of information and understanding is needed, and one normally would have to use a good financial calculator.
Even then, it was often not entirely accurate.
Whoever was calculating it for you would often fly through the figures and information at lightning speed, leaving you somewhat bewildered.
Fortunately, modern technology has come to the rescue and the internet provides a number of really useful online calculators. There are specific ones for personal loans, vehicle finance, home loans and other credit agreements.
Most of them are really easy to use and provide instant calculations that are easy to understand. They generally provide information pertaining to the repayment and how it is calculated.
With a few clicks, you can change various aspects like the deposit or terms of the loan. That allows you to see how those changes will affect the monthly repayment, as well as the total amount payable over the term of the loan.
They will also illustrate the impact of interest rates on the repayment. This is particularly useful if you are considering a fixed or linked interest rate on a home loan, for example.
Another benefit of these online tools is how they enable you to compare banks or financial institutions. While the basic maths of the calculation is the same at the various institutions, you might gain some addition information or insight by comparing their offerings.
Some institutions do have unique benefits and policies that could enable you to reduce the monthly payment, the term of the loan or the total cost of the loan.
Many of the sites will also advise you in terms of your affordability and give you a good idea of the size of the loan you are likely to qualify for.
Home loan bond repayment calculators will also advise you on things like transfer costs, bond registration and other fees. They offer valuable advice to make the process that much easier to understand and, most likely, allow you to get a better bond.
When negotiating the purchase, you should also have a good understanding of what the agent is talking about. This puts you in a position of strength, especially if you wish to negotiate other conditions. This is particularly useful for first time home buyers, as many of these costs and details might not be familiar to you.
Something that is particularly important is an amortisation calculator, which gives you a good view of what your bond will look like over the full term. It will illustrate how much interest you are paying, and how the capital amount decreases over time.
The bottom line is the better you understand how the loan and repayments are structured, the better able you will be to make an informed decision.
And now you know.
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