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| Monday, February 6th, 2012 | Welcome Guest [ Sign In ] |
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Click on any of the following items for more information: This model helps you compute the loan payment for a mortgage, auoto or a college loan. Even credit card loans can be analyzed with this module. In fact you can use it for any type of a traditional loan. This module can be used for fixed rate loans as well as adjustable or variable rate loans. It provides three outputs: the loan payment, total interest paid over the life of the loan and your total payments to the lender, including principal and interest over the life of the loan. The simulator is based on the amortization method, which simply means that the payments made to the lender will be equal every period, and the lender will split the payment between interest and repayment of the principal. This is the amount of the money that you borrow from a lender. This is also known as the starting or beginning principal amount owed to the lender. This is the number of payments to be made to the lender to completely pay off the loan, as well as the interest over its life. If the loan is for 5 years, and payments will be made monthly, enter 60 (= 5 x 12). If the loan is for 5 years and payments will be made quarterly, enter 20 (= 5 x 4). For annual payments, enter 5 in the input box for this example. This is the periodicity of payments. Please choose from annual, quarterly and monthly options in the dropdown box. Lenders schedule loan payments either at the beginning of the period (year, quarter, or month) or at the end of the period (this is more common). For end-of-the-period payments, please select the "In Arrears" option from the dropdown box. This rate is the rate charged on the loan and disclosed by the lender. It is also called the APR (Annual Percentage Rate). [Caution: All rates should be entered as percentages. For example, 12% should be entered as 12 in the input box.] How to Get the Most from this Simulator After you have entered the required values in the boxes and clicked on the Calculate button, you will see the results of the calculation: (1) the payment, total interest and total payments over the life of the loan, (2) a Graph that shows the loan balance as it declines every period, and (3) a Graph that shows the periodic payment, and its split between the interest component and the part applied to repayment of the loan. This is the loan repayment amount that reduces the outstanding loan amount in the first graph every period. You can also use the simulator to estimate the number of payments that will pay off a loan at a certain APR if you already know the periodic payment, or have an idea what you want to pay the lender every period. Enter a number for periods in the "Total Payments to be Made" input box as a first guess. Then compare the resulting payment to the payment you have in mind. If the resulting payment is greater than the one you have in mind, increase the "Total Payments to be Made," or vice-versa, if the output payment is less than what you have in mind. Keep tweaking the number in the "Total Payments to be Made" input box until you get the desired answer. You can also figure out how long it will take you to pay off a credit card balance if you have some payment amount in mind. |
