Consumer loan calculator
What is a consumer loan calculator?
A consumer loan calculator is a calculation tool for performing online credit simulations. You can find this type of tool on online bank loan comparators but also directly on credit institution sites.
A consumer loan calculator makes it possible to have visibility on the borrowing possibilities and repayment conditions of a consumer loan. It also makes it possible to compare the different offers on the market. It is true that the consumer credit market is a so-called hypercompetitive market, so it is strongly recommended to find out about several offers before taking out a loan. The consumer loan calculator just happens to be the ideal tool to do so.
First of all, you should know that there are several types of consumer credit. The 2 most common offers are:
- The personal loan: It is a loan ranging from € 200 to € 75,000 and the repayment period must be between 3 months and 7 years. Its particularity lies in the fact that it is not dependent on any particular purchase: The user can spend the borrowed amount as he sees fit. This loan is the consumer credit the most used by the French.
- Affected credit: The borrowable amount and the repayment period of the affected credit depend on the same conditions as the personal loan. The particularity of this loan lies in the fact that it is dependent on the purchase of a specific good. This condition makes this loan a stricter but more secure loan. It is very often offered by brands, for example, household appliances or cars which will offer you to pay for your purchase in several installments.
What can you calculate with a consumer loan calculator?
Thanks to a loan calculator, you will be able to see all the specific conditions related to the credit offer to which you wish to subscribe. The tool therefore makes it possible to calculate:
- The borrowing amount: This is the borrowing capacity of the applicant. This amount is determined according to the monthly payments that the beneficiary of the loan can afford, the desired repayment period, and also the Interest rate.
Example: A person who can afford to pay monthly payments of € 300 for a period of 3 years, if the interest is 1.75%, can borrow the sum of € 10,635.
Monthly payments: This is the amount that the beneficiary will have to reimburse each month. It is generally recommended to determine for yourself the amount of monthly payments that you can afford before applying for credit. Here, the calculator can give you an idea of your monthly payments according to the amount of the loan and the duration of the repayment, as well as the interest rate.
Example: A loan of € 5,000 with an interest rate of 2%, and a repayment period of 2 years, will generate monthly payments of € 212.7.
The repayment period: This is the time it takes to repay the amount borrowed, as well as the interest, depending on your monthly payments and the interest rate.
Example: For a loan of € 8,000, whose interest rate is 1.60% and whose expected monthly payments are € 350 per month, the loan repayment period will be 23 months, or almost 2 years.
The APR (annual percentage rate of charge): This is the interest rate set by the bank or the credit institution. It makes it possible to assess the real cost of credit. This makes him the real point of comparison when applying for a loan. The lower the interest rate, the more attractive the credit will be.
The APR can in no case be higher than the rate of wear. This is the maximum legal rate imposed by the Bank of United States. For example, in the first quarter of 2017, the usury rate is set at 6.65% for consumer loans over € 6,000.
Credit organizations must include the interest rate of an offer in their advertisements, credit offers, and credit contracts.
For information, the APR includes the base interest rate, the administration fees and commissions related to the setting up of the credit as well as any possible insurance premium. Notary fees are not included in the interest rate.
Please note that interest rates may vary depending on the credit institutions.
Example: For a loan of 5,000 €, if your monthly payments are 195 € extended over 26 months, this means that the TEAG is 1.25% (and therefore the interest of 70 €). In comparison, if this same loan is repaid with monthly payments of € 200 over 26 months as well, then the TEAG will be 3.57% (and therefore the interest of € 200).
Interest, or the cost of the loan: They depend directly on the amount of the loan and the interest rate.
Example: For a loan of € 4000 with an interest rate of 2%, the interest will be € 80. It is therefore considered that the loan requested will have a cost of 80 €.
Notary fees: Since they are not included in the APR, some sites offer calculators of notary fees.
Example: For an affected loan, if you want to buy a new property (or less than 5 years old) with a value of € 1,000, you can assess the notary fees at € 56.