January 8, 2019 How to check the approximate loan installment? The loan repayment schedule serves that purpose! With the help of the loan calculator you will find out the amount of monthly payments in a given loan period. What information does the loan repayment plan contain? What can change the loan repayment schedule? We answer all questions so that you can pay your bank liabilities in accordance with your loan agreement!
Loan repayment schedule – how to calculate the loan installment?
We set the cash loan repayment schedule using the loan calculator. In this way, we verify the amount of monthly payments, which we must prepare for when signing the loan agreement. Knowledge about installments allows you to plan your budget wisely. Nobody wants to meet the bailiff! We will avoid it if we choose the type of loan wisely and decide on the offer wisely. The monthly cash loan ranking helps you best.
The loan repayment schedule is in the form of a simple table. It clearly and clearly indicates the specific amounts of the loan installment that we will have to pay each month of the loan. Such an accurate record is very helpful. Especially when we do not want to worsen our credit history and we do not intend to expose ourselves to statutory interest for delay.
What can we find in the loan repayment schedule?
The loan repayment schedule contains basic information on how to pay. If we want to generate a detailed loan repayment plan, enter the following data in the loan calculator:
- amount of credit,
- commission amount,
- loan interest rate,
- loan period,
- type of loan installments.
After completing the information, we receive an accurate loan repayment schedule, divided into principal and interest installments, and with the current balance of debt after each installment repaid.
Loan repayment schedule and types of loan installments
The loan repayment schedule may indicate one installment amount or different installment amounts – depending on what types of cash loan installments we have chosen.
Most commonly used loan installments:
- equal installments,
- decreasing installments.
Equal installments (annuity, permanent) are the most popular way of paying off loan installments. They consist in maintaining the same amount of installments throughout the loan period. A feature of these installments is the changing proportion of capital and interest. Importantly, initially the installment consists mainly of interest, to which the appropriate amount of capital repaid is added.
Decreasing installments also consist of capital and interest parts, however in this case the amount of the capital part is fixed. We calculate it by dividing the initial loan amount by the number of installments. The variable part is interest on outstanding capital – the smaller the capital, the smaller the interest in each subsequent installment. The advantage of decreasing installments is repayment of a large part of capital at the beginning of the loan period.
Choose equal or decreasing installments? With decreasing installments, we repay the debt balance faster, but on the other hand – equal installments give a lower payment amount in the initial loan period. As a result, the required creditworthiness is much lower. Therefore, the decision on the type of installments should be made individually!
How to calculate the mortgage installment?
The loan calculator is not only used to determine the cash loan repayment plan. We can also use it when calculating the mortgage installment. In this way, we will compare mortgage loans, analyzing how much the loan installment will amount to us at individual banks. The decision should not be hasty!
Especially in the case of a loan for an apartment, which bind us to a financial institution for a long time. For this reason, it is worth looking for the cheapest mortgage, with the lowest interest rate and commission.
When can the loan repayment schedule change?
The loan repayment schedule is not irrevocable. It may change at our request or independently of us. Let’s get to know the situations in which this can happen.
Reasons for changes in the loan repayment schedule:
- change in loan interest rate – loan interest rate is one of the main elements determining the total cost of a loan. The interest rate consists of the bank’s margin (fixed value) and Euridor (variable value). When taking out a loan, we must decide whether we choose a loan with a fixed or variable interest rate, accepting the risk of interest rate,
- change of installment repayment system – e.g. change from equal to decreasing installments, taking into account the fee for changing the basic parameters of our loan,
- change in the installment repayment period – e.g. by overpayment of the loan or earlier repayment of the loan, which should involve the return of part of the interest for the unused loan period,
- credit holidays – temporary suspension of repayment of installments. During the loan holidays, we do not repay either the principal or the interest portion of the installments,
- grace period for loan repayment – deferral of the principal part of the loan installment. The interest part requires normal repayment!
The loan agreement terms may provide for an additional fee for issuing a new repayment schedule.
How do you get a loan repayment plan?
We calculate loan repayment plans on the bank’s website before we take a loan, and after signing the loan agreement, we receive it from a financial institution. The loan repayment schedule is an integral part of the contract and takes a paper or electronic form. Let’s not throw away the loan repayment schedule! It is worth keeping it to be able to verify at any time whether we are paying the right amount and what part of the capital we have to pay. Especially when we decide on decreasing installments and we cannot set up a direct debit on the bank account. In the case of fixed installments, we do not have to remember about monthly payments, having the creditor automatically debit our account.
When we decide on overpayment of the mortgage, credit holidays or change of the installment repayment system, we receive a new loan repayment schedule from the bank. The bank will calculate the new installments in advance and recalculate the costs associated with changes in repayment, informing you about the remaining balance of debts and the payments awaiting us.