Table of Contents
- About the loan simulator
- How to use the loan simulator?
- What is a loan?
- What is a loan for?
- What are the loan types?
- What are the advantages and disadvantages of a loan?
- Loan example
About the loan simulator
The CalculatorForUs's free online loan simulator will help you choose the best conditions for taking out a loan without any unwanted surprises. Feel free to perform as many simulations as you wish.
Remember, our loan simulator should only be used as an informational tool with no legal values. Always consult a specialist and the rates and conditions of the institution from which you intend to take the loan.
Read on for answers to the following questions:
- How to use the loan simulator correctly?
- What is a loan, and what is it for?
- What are the loan types?
- Are there advantages and disadvantages to taking out a loan?
How to use the loan simulator?
Fill in the form fields according to the following description:
- Loan Amount: The loan amount you want;
- Interest rate: The interest rate that will be levied on the loan (can be set as monthly or annual rate);
- Number of installments: The number of installments you want to repay the loan.
After filling in all the fields, click on the 'Calculate' button and the simulator will show you the result.
The 'Clean' button clears the form fields, so you can fill them with other data.
What is a loan?
Loan is the term used to designate an amount made available from one person to another to be paid posteriorly. Of course, we are talking about financial lending, where what is borrowed is money, but loan is a generic term and can be used for many other things, an example would be a neighbor lends a screwdriver to another neighbor expecting to receive it after use.
The financial loan can be made from one person to another, but it is more common that it is made from a financial institution to an individual or legal entity. As the loan will not be paid immediately, the most common loan payment method is the payment in installments and therefore the most common is that interest is charged on the payment of this loan.
What is a loan for?
The loan can be used for several things, a trip, paying off a debt, buying something, that is, it does not have a specific purpose. But there is a form of loan with objective, financing, it has a defined objective as the financing of a property where there is an agreement to loan the money specifically for that purpose.
What are the loan types?
The types of loans available may change from country to country, some particularities may be seen in some regions and not in other regions. But we can list some very common types of loans, see some of them:
- Personal loan: The most common type of loan occurs when a person goes to a financial institution and applies for a loan for personal purposes. This option will be subject to a credit analysis to be approved;
- Credit card: Few people know, but a credit card is nothing more than a loan from the issuing bank or the financial institution that issued it, when paying an account with it, you use the credit you have with the financial institution to pay later with your money, that is, a loan;
- Housing finance: Housing financing is a loan for the purpose of acquiring, renovating or building real estate. In this modality, the interested party must go to a financial institution for hiring, which will evaluate from documents to the possible property to be acquired or renovated;
- Auto financing: This is the financing that aims to acquire a car, similar to housing financing, the interested party makes this type of loan with a financial institution;
- Student loan: For the university student who cannot afford the tuition fees for their studies, there is student financing. This modality aims to help the student pay a portion that fits in their pocket to enable their graduation.
What are the advantages and disadvantages of a loan?
Among the advantages of taking out a loan we have the fact that it is a great way to solve an emergency since if you don't have the money you need at the moment, with the loan this is solved.
As we mentioned earlier, there are several types of loans that exist to meet different needs, and this can be very useful if you are looking to buy a house or buy a car and don't have the money you need at the moment.
But like everything that is good, loans also have the not-so-good part, and we must be aware of some details. A loan taken out at a financial institution will likely contain interest, and your work here and be aware of that interest. If the interest rate is too high you will be paying much more than you received as a loan in the end, the ideal isto evaluate if it is worth it.
The more installments you choose to pay off your loan, the more interest you will have to pay as well. Keep an eye on that!
Other things to watch out for are the rules for the loan. Check if there will be a fine for delaying an installment to organize yourself better. When taking out the loan, inform yourself about other fees and taxes that will be added to the amount you will have to pay.
All of these can be seen as disadvantages, so research a lot before taking out a loan to make the best decision.
Loan example
Marina would like to take a trip abroad that would cost $8,000.00 and pay off a debt with her aunt in the amount of $1,500.00, so she decided to take out a loan from the bank where she has an account.
Before going to the bank, Marina decided to do a loan simulation using the loan simulator on the website CalculatorForUs to get an idea of how much she would have to pay when applying for a loan in the amount of $9,500.00, an amount that would make it possible to pay her aunt and make your trip.
Marina saw on her bank's website that the interest rate for a personal loan was 12% per year, and so she made a simulation putting the amount of $9,500.00 at a rate of 12% per year and tested the payment in 12 installments.
The result showed that the installments would be worth $892.07, which Marina considered high for her income, so she decided to simulate 18 installments.
Although the result showed a slightly higher total amount to be paid than before, Marina liked the value of the installment, which was $631.30, as it would fit in her pocket without compromising her income.
Satisfied with the result of the simulation, Marina went to her bank to request the loan, which had a few more fees and taxes, but was very close to the simulation made on the website CalculatorForUs.
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