A rare person today manages not to take a loan. But for some, this is the only way to provide housing for themselves and their families, and for others it’s a way not to deny themselves various pleasures, which include a new car, chic shoes or a trip on a trip. In any case, credit is part of our lives, and it would be nice to understand how to calculate loan payments. Is it possible to do it yourself at home? Or do you need to be a specialist?
Situation overview
Over the past ten years, there has been a rapid growth in the lending market, and lending to individuals has become especially popular. It is logical that the financial literacy of people has increased slightly. In fact, it is right that people began to save their money and think about where they spend it. I had to plan cash flows and imagine what means the loan payment would be made up of. The secret is that the availability of credit makes you forget about the sense of reality. That is, a person always has in stock a certain balance of funds, whether it be a credit card or a quick loan. Moreover, the advertisement eloquently promises that in your wallet there will always be money for a new dress or covers for a car. The pink veil will subside later, when it is time for reckoning.
Before you decide
Yes, you need to decide on a loan! Can you find the money for a monthly payment? And do you really need that thing for which you want to take money? You need to consult with family members and, of course, do not take the first loan you see. Offers vary in different banks, and sometimes they may be beneficial for your category. For example, an acceptable percentage may be offered to retirees, students, or young families. It is worth considering the option of force majeure, when there is simply no money to pay for a loan. A number of banks meet customers and offer debt restructuring. Agree, confidence is added when emergency escape routes are thought out. Well, of course, you can pre-calculate the loan payment. Sberbank, for example, provides such an opportunity online. On the official website there is a calculator where you can register the required amount and the preferred loan term.
In the process of solving
So, how to calculate loan payments? And why is this necessary if the bank can do everything on its own? For complete confidence in the transparency of services, the structure of payments and the absence of hidden fees. You can make preliminary calculations at home, having on hand a calculator, pencil and a sheet of paper.
Annuity Payments
The most popular in the practice of lending are annuity payments. Their amount is the same for the duration of the loan agreement. Such a payment consists of two parts: funds that go to pay directly the loan, and interest accrued on the amount of debt. Until the very end of payments, the amount remains unchanged, but initially interest prevailed in it, and by the end - the main debt. And how to calculate loan payments of this type? There is a special formula: P = C * (% * (1 +%) x n ) / ((1 +%) x ( n -1).
In this formula, P is the amount of payment, C is the amount of the loan. Accordingly,% - reflects the interest rate, and n is the accrual period in months. In order to correctly calculate the loan payment schedule, the annual rate can be converted into a monthly rate, and then expressed in decimal. It turns out a monthly payment.
Up to a day
But when drawing up a loan agreement, the schedule is drawn up on certain days, and therefore the annual rate is converted to the daily rate, that is, divided by the number of days in a year. In this case, n increases. When calculating the monthly and daily rates, the difference is small, only a couple of tens of rubles, but it can also carry weight. If you own the construction of tables, you can build an analogue of a bank payment up to a day.
So we can introduce another concept of “differentiated payment” into the conversation. What is it and how to calculate loan payments of this type? So, a differentiated payment is distinguished by the fact that it decreases by the end of the loan term, and its main share is the loan debt, and the remaining one is the percentage of the outstanding balance.
Let us return to the question of how to calculate the amount of payment on a loan. The total amount of debt should be divided by the number of months of planned lending. The received number will be the main payment. The calculation formula is simple - B = S: N , where B is the main payment, S is the loan amount, and N is the number of months. But this is not all, because you also need to learn how to calculate the monthly loan payment, taking into account interest. Here one more value is required - p is the annual interest rate. For the final calculation, you need to multiply the loan amount by the annual rate and divide the result by 12 months.
In order not to miscalculate
Even if you calculate the loan payment in advance, Sberbank, for example, may suddenly surprise you with the amount, since it will include borrower insurance. Or the percentage can, on the contrary, be more loyal if there are bonuses in the calculation. For example, a lower rate may be for bank employees. It is sometimes worthwhile to refuse insurance if, for example, the loan term is short and insurance costs will not be justified. But in a situation where a mortgage is issued, insurance is mandatory, and in case of loss of working ability of the main borrower, the debt can be written off.
The situations with the most honest behavior of organizations issuing loans were considered above, but it also happens that banks behave incorrectly. For example, you can still find references to interest-free loans, which, alas, do not exist! It’s just that all charges and commissions for documents are registered in the column “other fees and commissions”. In addition, sometimes bank employees offer extremely unfavorable loan conditions, hoping for the lack of customer awareness. Thinking of how to calculate the monthly loan payment, you should apply for a printout to several selected banks in order to compare the charges and fees, as well as choose the most transparent loan option. I must say that differentiated payments are often more favorable under the conditions, and the calculation by the annuity method is very specific and costly. The main thing is not to rush with the design and carefully check all the dubious items.