Personal Loan Calculator (2020) – Calculate Your Monthly Payment

Elroy Mariano

Table of Contents Personal Loan CalculatorStart With the Interest RateConsider Alternatives Before Signing Your NameBottom Line” + linkText + ” Personal Loan Calculator Photo credit: © iStock/Roman_Gorielov Personal loans can be your ticket to paying off high-interest credit card debt or tackling big bills. But like all debt, personal loans […]

Personal Loan Calculator

Photo credit: © iStock/Roman_Gorielov

Personal loans can be your ticket to paying off high-interest credit card debt or tackling big bills. But like all debt,
personal loans are not to be taken lightly. Once you’ve figured out how much you need to borrow and how much you can afford
to pay back each month, you can start shopping for personal loans. Personal loan calculators help you know what to expect.

Wondering if a personal loan is right for you? It’s important to ask yourself why you want to borrow money. Is it to pay
off bills or move to a city with more job opportunities? Is it to eliminate high-interest credit card debt? All of these
are scenarios where it might make sense to consider an affordable personal loan.

What do we mean by affordable? True affordability is a factor of both the personal loan interest rate and the personal loan
payments over time. Even a loan with a low interest rate could leave you with monthly payments that are higher than you can
afford. Some personal loans come with variable interest rates that can increase after a period of time. These loans are riskier
than those with fixed interest rates. If you are looking at variable interest rate loans it’s a good idea to ensure that you
will be able to afford it even if the interest rate reaches the highest point possible in terms.

Start With the Interest Rate

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The higher your credit score, the lower the interest rate you will likely qualify for on a personal loan. If you think you might be
in the market for a personal loan in the future, it’s a good idea to get to work building up your credit score. Contest any errors
in your credit report, pay your bills on time and keep your credit utilization ratio below 30%.

Once you’re ready to shop for a personal loan, don’t just look at one source. Compare the rates you can get from credit unions,
traditional banks, online-only lenders and peer-to-peer lending sites.

When you’ve found the best interest rates, take a look at the other terms of the loans on offer. For example, it’s generally a
good idea to steer clear of installment loans that come with pricey credit life and credit disability insurance policies. These
policies should be voluntary but employees of lending companies often pitch them as mandatory for anyone who wants a loan. Some
applicants will be told they can simply roll the cost of the insurance policies into their personal loan, financing the add-ons
with borrowed money.

This makes these already high-interest loans even more expensive because it raises the effective interest rate of the loan. A small
short-term loan is not worth getting into long-term debt that you can’t pay off.

Look out for fees and penalties that make it harder for borrowers to pay off their personal loans. An example: Prepayment penalties that
charge you for making extra payments on your loan. Read loan terms carefully and check for language that explicitly states the loan doesn’t
carry prepayment penalties.

Stay away from loans that come with exit fees, a fee some lenders charge you after you pay off your loan. You shouldn’t have to pay an
exit fee, or work with a lender who wants to penalize you for personal loan repayment.

Consider Alternatives Before Signing Your Name

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There are alternatives to commercial personal loans that are worth considering before taking on this kind of debt. If possible,
borrow money from a friend or relative who is willing to issue a short-term loan at zero or low interest. Alternatively, if you
have high-interest credit card debt that you want to eliminate you may be able to perform a
credit card balance transfer.

What’s a balance transfer, you ask? Some credit cards offer a 0% APR
on new purchases and on your old, transferred balance for a year. If you can get one of these deals and manage to pay off your balance
while you have the introductory interest rate you may be better off opting for a balance transfer than for a personal loan. It’s important
to pay off your balance before your APR jumps from the introductory rate to a new, higher rate.

Loan calculators can help you figure out whether a personal loan is the best fit for your needs. For example, a calculator can
help you figure out whether you’re better off with a lower-interest rate over a lengthy term or a higher interest rate over a
shorter term. You should be able to see your monthly payments with different loan interest rates, amounts and terms. Then, you
can decide on a monthly payment size that fits into your budget.

Bottom Line

All debt carries some risk. If you decide to shop for a personal loan, hold out for the best deal you can get. Sure, payday loans
and installment loans offer quick fixes, but these loans can quickly spiral out of control. Even those with bad credit can often
get a better deal by searching for a loan from a peer-to-peer site than they can from a predatory lender. See for yourself by
researching your options with a personal loan calculator.

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