There are four calculators, which you can download in one spreadsheet, but we show them individually below. Enter amounts in the blue shaded cells, and the calculation results will be shown in the green shaded cells. Go ahead and make changes in the blue cells to see how they work. NOTE: it is possible they will not show properly on some mobile devices (you may see a grey box), in which case, you’ll need to switch to a computer/laptop (sorry 😥 ).
How much are my payments?
The first calculates your loan payment. For this, you need four pieces of information:
- Loan amount
- Interest rate
- Loan term
- How often are the instalments (usually 12 i.e. monthly).
The only one of these you need from a bank is the interest rate, but this is relatively simple to obtain or estimate.
In the example shown, a $100,000.00 loan at 8% for 3 years with 12 monthly instalments would require repayments of $3,133,64.
In addition, 2 other balances are calculated: the total interest you will pay over the life of the loan ($12,810.92) and then the total principal plus interest ($112,810.92). The interest over the life of the loan is particularly interesting, as it shows how expensive the loan could be.
What loan value can I take?
The above calculator is probably relatively easy to understand, but sometimes we want to calculate something other than loan payment.
Let’s say, we know the monthly instalment we want to pay (because this is what we can afford), together with the interest rate, and loan term; therefore we want to know what is the amount of loan we could take. The second calculator can help us with this.
Using the information as before: 8% interest rate, 3-year loan term, and a monthly instalment of $3,133,64 would give a loan value of $100,000.00
What interest rate am I paying?
The third gives you the interest rate you are being charged (8% will be calculated) if you know the loan amount ($100,000), loan term (3 years), and monthly instalment ($3,133,64).
How would this be useful? Sometimes it’s not obvious (or we forget) what interest rate we are being charged/offered when we go to take a loan. As with all types of purchases, you need to shop around to make sure you are getting a good deal, and in the case of loans, the cost (the interest rate) you pay is very important. This calculator will therefore help you compare the rate between different lenders – to choose the lowest in most cases.
How many years will I take to repay?
The fourth and last calculator gives you the loan term (3 years will be calculated) if you are provided with the loan amount ($100,000.00), interest rate (8%), and monthly instalment ($3,133,64).
We tended to use this one for our information more than anything. We don’t like to be in debt and always wanted to pay it off as quickly as possible; therefore it was important to know how long it would take to repay a loan if we changed one of the inputs e.g. if we increased the monthly payments.
These calculators cover the situations most of us encounter, and allows you to calculate various scenarios of affordability. This should arm you with sufficient information to have a meaningful conversation with a lender, in the context of what your budget can afford – you are now in control…!
By reading through the above, you would understand how they work, but if you aren’t sure how to actually apply them in practice, don’t worry, we’ll show you in other posts.
We hope you enjoy using them!