Lending today is hardly anything out of the ordinary to call. Consumer loans for the purchase of goods, credit cards, short-term loans have become commonplace. If you look at the West, all of America lives on credit, and the IMF generally lends to entire states. But let's look at the practical point of view of lending to ordinary consumers. Here the most basic thing is the formula for calculating the loan at the conclusion of the contract, to which many borrowers in most cases do not pay attention. And this in the future may play a cruel joke with them.
Loan payment calculation formula: basic knowledge
Before giving the mathematical equations themselves, several concepts should be clearly defined. The most important thing in any loan agreement is the repayment of the loan body, that is, repayment of the initial loan amount in full.
But it’s just that no bank or financial institution gives money. They, as a minimum, require for this to pay interest for the entire period of use of the loan. By the way, if anyone does not know, such a technique was adopted by the Templars and Masons.
But that is not all. The modern loan calculation formula implies the exclusion of risks associated with a hypothetical non-payment by the borrower of the funds established by the schedule. Therefore, insurance, reservation expenses, etc. are additionally included in loan agreements.
In fact, the formula for calculating the loan in the sense of repaying the main debt, if made in equal parts, may look like the total loan amount, broken down by the month, that is, S / n, where S is the loan amount in its initial form, and n is the amount months (but not years).
If you proceed from the monthly payment, taking into account the number of days in a year, the loan calculation formula takes on a new look. The loan amount is divided by the total number of days for the full term of its use, after which it is multiplied by the number of days in the current month.
For example, a month can be 30, 31, 28, or 29 days. Accordingly, the entire loan amount is divided by the number of days, and then in the current month is multiplied by the number of days.
How can interest be charged?
The formula for calculating interest on a loan is somewhat similar to the above example. It is believed that the borrower pays interest exclusively for the specified period of use of the loan (day, week, month, year). The percentage is calculated differently. It may depend on the number of days of the established term or be fixed (in this case, interest payment is similar to repaying the loan body).
However, if you follow the generally accepted rules for repaying interest for the full term of using the loan, the formula will look like dividing the loan amount by the total number of days in the period, followed by multiplication by the percentage and the number of days for which payment must be made.
Some banks offer payment at the end of the term. Again, the calculated interest amount is broken down into periods with fixing.
But one of the most interesting and attractive marketing methods is to accrue interest on the balance of the main debt. Thus, the formula for calculating the loan (of the body, although it is repaid ahead of schedule) remains unchanged, but the faster the main debt is repaid, the less interest the borrower overpays. In this case, the delta of the total and paid amount is divided by the remaining total number of days and multiplied by the percentage and number of days corresponding to the current repayment period. But some banks impose penalties for this. And this is understandable, because they are losing profits.
The formula for calculating the annuity loan payment : what is the essence?
Annuity loans are classified as differentiated. In this situation, all payments related to the main debt are repaid in equal installments. There are two types of repayment: numerando and postnumerando. In the first case, the main payments are made exactly on time or at the end of the period. In the second - earlier than the scheduled date (as in the case of early repayment).
And payments of this type themselves can be fixed, tied to the exchange rate, indexed taking into account the inflation rate, urgent, perpetual, inherited, etc. The formula for calculating an annuity loan can be shown in the simplest example.
Let's say the loan amount is 100 thousand rubles, the annual rate is 10%, and the loan term is 6 months. The monthly payment will be 17,156.14, but interest will decrease. To calculate the total overpayment at a certain time, you just need to multiply the amount of the loan body by the number of months and clear the full loan amount. In our case, this is 17156.14 * 6-100000 = 2936.84.
Hidden clauses of loan agreements
Separately, it is worth saying that the contracts may also include clauses related to credit risk insurance. They need to pay special attention.
The commission can be paid initially or broken down by the deadlines, which can cause additional costs when determining the amount of the same monthly payment. There are also various kinds of commissions, for example, for issuing cash, for servicing a credit card, for SMS notifications for transactions, etc. But all this also costs money, and for some reason no one really thinks about these expenses.
Debt repayment procedure
If a delay arises, the procedure is as follows: in the first place, overdue interest is repaid, in the second - overdue principal payment, then - interest and penalties. If at the moment there is another debt, it is repaid after the past due, and the penalty is the last.
Conclusion
As you can see, the formula for calculating the loan may vary depending on the situation. But the main question is that in such a bondage, even on the most favorable conditions, one should not climb. No matter how attractive all this is, no financier will miss the opportunity to make money. And, as a rule, including hidden payments and the state of financial markets, the average person will lose anyway.