Loans provide a financial cushion to the borrower. Before availing a loan, it is prudent to look at all the available options and choose the one best suitable to your needs. Loan payment calculator, available aplenty online and also with your lender’s website, lets you determine the monthly repayment amount just with the help of few criteria like loan amount, term, interest rate etc. To understand the dynamics of repayment, understanding this is a crucial step in the loan process.
The key terminology used by lenders:
Principal amount – The amount of money you borrow is called as the principle amount. Purchase price, rebates (if any), cash down payment and trade in value (if any) are the various components of the principal amount.
Loan term – The period of time that the loan will be outstanding, is referred as the loan term. Longer the term, more is the interest on the principal amount.
Interest owed on the loan – Your interest rate for one month is known as a monthly interest rate. Interest rate multiplied by the outstanding principal amount, is the interest you owe for a particular term. A loan with a shorter term has a lower interest. A larger amount of monthly payments reduces the principal amount faster, thus reducing the interest paid on the loan.
Amortization calculator – For a loan that is amortized, the borrower pays a fixed amount monthly, which includes repayment of both the principal amount and the interest owed. As time progresses, the principal amount repayment becomes larger and the interest amount lower.
Total interest paid – Subtracting your principal amount from the total value of payments, gives you the total interest paid.
A commonly used formula for loan payment is:
Monthly payment = [ r+r / ( (1+r)^ months 1) ] * principal loan amount
where r = decimal rate / 12
As with any other loan, paying a higher sum every month pays off the loan faster. While using an online loan calculator, please be aware of the following:
Use this tool only as a planning guide. The final figures need to be worked out with your lender.
Results are based on a standard repayment plan where a fixed amount is paid every month for the duration of the loan.
If you are planning to use other repayment plan options, a separate calculation has to be done for the same.
Please note that the interest rates vary from lender to lender and depend on eligibility.
Many calculators do not factor in any fees that may have been included in your loan.
There are companies that work on collecting and maintaining credit information of consumers. These are known as credit reporting agencies (CRAs). There are three such major CRAs in the country, namely Equifax, Experian, and TransUnion. Apart from these, there are other smaller-scale agencies too that specialize at the job. If you’re worried about “where to get my credit score?,” the larger CRAs are the most reliable bets.
These major CRAs obtain information from companies that you hold business and transactions with. People or companies that lend you money regularly report to these CRAs on your repaying status. There is also detailed information on the amount you are indebted and whether you have ever defaulted on your payments. Aside from the reports obtained from lenders, these companies also tally your general records based on certain other aspects. Some of these aspects are your public records from the local and state judiciary. These include your tax records and bankruptcy information. This information makes up an important chunk of your credit score and its report.
Equifax
Present in 24 countries, Equifax is an agency that offers consumers protection against identity theft and credit fraudulence. They also sell credit reports and credit monitoring assistance to businesses.
Experian
Experian started off in London and is now a trusted agency in 39 different countries. It provides you with a credit score, credit report, and even credit tracker on subscription. The agency uses FICO 8 system of credit score calculation. Experian was a part of Forbes’ “World’s Most Innovative Companies” in 2018.
TransUnion
Based across 30 countries with a database of over 1 billion consumers, TransUnion is another CRA giant. The agency, like the other ones, will provide you with your credit score and your credit reports. In case you decide to freeze your TransUnion credit report, it will also go the extra mile to notify Equifax and Experian, which frankly is a big help especially in case of identity theft and credit fraud.
So, the next time you are sat wondering “where to get my credit score?,” think of these three giants that provide you with an annual credit score and credit report for free once each year. However, if you are looking for more frequent updates, you can subscribe to their services and receive your monthly updates.
Did you know that you have more than a single credit score? Agencies calculate your credit score based on the data in your credit reports. If you are wondering, “where to get my credit score?,” there are three main credit reporting agencies. These can have different credit scores for you if your information on each of their credit reports is different. Also, these agencies charge a fee to reveal your credit score.
Recently, it has become easier to track and get hold of your credit score without paying any fees. You can get it from your credit card company, your loan provider, and even from a non-profit counselor. Here are a few tips you can use to check your score.