A loan is an amount of money borrowed by a person (borrower) from a lender (a person, bank or union), usually with interest which has to be repaid within the stipulated period. It can be categorized into three ways and the calculator is divided into three parts:
1. Amortized Loan:Regular fixed payments made over a specified period.
2. Deferred payment Loan:Borrower is allowed to delay payments for specified period.
3. Bond: Principle amount paid at bond's maturity date.
This calculator is designed to calculate common loan types with accurate results. Use this and get instant results.
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Using this calculator you can get the initial face value (present value) of a bond that will be paid in full at maturity.
Amount Received When the Loan Starts: $0.00
Total Interest: $0.00
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This calculator is developed to calculate a deferred payment loan.
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Relevent:
Mortgage Loan Calculator
loan interest calculator
Amortized Loan is the major category of the loan. It is the type of loan where borrower repays amount of loan through specified fixed regular payment, usually on monthly basis. This regular payment consists of portion of principle amount and rate of interest.
As the payment repays over time, the principle amount decreases and also interest decreases. Commonly used word loan refers to this type of loan. It includes most familiar loans such as mortgages, student loan, personal loan, car loans etc. .
Deferment period is the period of time during which a borrower is allowed to delay in making payments and is not required to pay the loan or pay only interest. After expiry of this period, borrower has to pay regular payments at the terms and conditions of the loan. This is commonly used for mortgages, student loans etc, where the future income of the borrower is expected. It can be in shape of full payment at once or on regular payments as the terms may be. Usually interest is applied during the deferment period which increases the total cost to be repaid.
A bond is an instrument used to obtain loan. Investors buy the bond from borrower and the borrower promise to repay the investment at the time of maturity. It is usually issued by corporate sector or a government to raise their capital. This makes it different from conventional loan. The repayment of bond loan may be with periodic interest called coupen or principle amount called face value or par value received at the time of maturity.
Coupan rate is the interest paid to bondholders at annual basis. Zero coupen bond doesn't pay periodic interest instead sold at discount price face value, par value is paid at the time of maturity. After issuance of bond, its value fluctuate according to market conditions but it doesn't effect face value at the time of maturity. Keep in mind that this type of loan is most rare and usually issued by government entities. Some entities offer prizes with the bond to attract the investors. There are more types of bonds such as government bonds, corporate bonds, municipal bonds, convertible bonds, zero coupen bonds and more.
As we have discussed above that a loan is a financial deal where a lender pay amount of money to borrower and borrower agrees to repay the debt in a stipulated period with interest.
Principle amount is original money or debt borrowed by a person or company. It doesn't include any extra amount. For example if you borrow loan of $10000/-, this is the principle amount of debt.
Interest rate is the profit charged by lender on principle amount of debt. It is the percentage of loan paid by borrowers to lenders. Every state has it own laws about percentage amount. In addition to principle amount, interest rate is added which has to be paid by the borrower whic is calculated in annual percentage rate or APR. APR contains interest and fees.
Compound interest is the interest rate lavied not only on initial principle amount but also on accumulative interest. Meaning thereby, if the compound interest is applicable, you need to repay more than common interest.
Term is the length of time or a stipulated period over which the loan must be repaid. It is considered as very important factor while securing loan. Interest rate is directly affected by the term. The longer term means higher interest rate which has to be paid by borrower and shorter term means minimum interest rate.
Repayment schedule may include monthly installments or any other options made at the time of obtaining a loan. Collateral is considered as secure loan in which borrower pledges asset i.e house or car etc. A lien is signed by the parties which authorize the lender right to possession of property of another person. If borrower fails to repay the loan amount, lender can seize the asset put up as collateral.
Mortgages and car loans are most common examples of secure or collateral loans. In these types of loans, lender holds the title of ownership, until the loan fully become mature. If the borrower fails to repay loan, it automatically disentitle him from the house or car and liable to be ousted or dispossessed/foreclosing of home. Generally, collateral loans have high chances of approval.
Uncolateral or unsecured loan is an agreement of debt without pledging any asset. This method needs verification of the financial integrity and ability to repay the loan as there is no collateral involved. In order to ascertain potential and credit worthiness of a buyer, a methodology is applied which is called five C's. This method includes character, capacity, capital, collateral and condition.
Character ascertaining is the process to check track record of the borrower whether he has ever secured a loan from any bank. If he, has he repays the same by fulfilling his obligation in the past. His income level, experience and outstanding legal dues are also taken into consideration.
Capacity is the process to asses the ability of borrower whether he is financially capable to repay the loan amount. It can be mesure with the amount of debt applied with his income. Borrower's capital is also checked in order to ascertain whether he has any asset like home, car, savings and any other asset which could be used to fulfill loan obligation in case he fails to repay the debt amount within stipulated period. As discussed above, collateral is the process of pledging some asset in order to obtain loan which can be seized and auctioned upon default of borrower. Borrower's condition and market conditions are also taken into consideration while approving loan to a borrower.
These loans generally applies higher interest rates and have low chances to be approved. If approved, then have shorter term. Lender also requires guarantee of the borrower that if he fails in default then the guarrnteer shall be responsible for payment of the loan. If borrower fails to repay debt, lender bire services of collection agency. These agencies are offer services to collect default amounts.
As you have got knowledge about the loan basic terms you can now easily calcute any type of loan using this loan calculator. This calculator is easy to use. Just enter the required fields and click on calculate, results will be shown in numbers as well as percentage graph. For further information.