Once you have decided to finance your new purchase with a loan, you should familiarize yourself with the numbers and consult an online loan calculator . Because in the end you do not want to pay more than necessary for your loan. But finding this out is not that easy, as banks have very different opinions.
Therefore, it is worthwhile to compare loan offers online with a loan calculator. What a high risk bank does not have to apply to a second bank as well. Therefore, you should leave the decision as to whether a loan is a good offer not to the bank but rather to the outcome of a loan calculator.
With loan application, you have the opportunity to easily and simply find a loan that is tailored to your needs. By entering the loan amount, the term and the purpose of use, you already make a pre-selection and only see the offers that meet your criteria.
The building blocks of a loan calculator
Ultimately, the variables of a loan calculator are mainly about the following six components:
- loan amount
- nominal interest rate
- Additional costs / one-off costs
- effective interest rate
- Monthly Rate
- Contract period
A loan calculator shows you the total costs that you have to pay when you take out a loan. You can also use the loan calculator to easily track how much prepayment and interest you make on your monthly payments. This will give you a good sense of what it costs you every month to buy something today that you do not currently have the money for or do not want to spend. All you have to do is keep track of monthly interest rates, unless there are other cost blocks.
The biggest advantage of the loan calculator lies in the comparison of the different offers of the banks. If you pay attention to all the important points, you should compare them very well and make the right decision for you. You can also use the loan calculator flexibly. For example, you can enter a desired loan amount, the duration, and the optimal monthly rate to determine which maximum interest rate you should pay. But you can also enter your interest rate and your monthly maximum willingness to pay and find out what the right term for your loan is.
The basic knowledge – annuity loan
Before you start with the loan calculator, for example, in Excel, you should be aware of the math. Most installment loans in Germany are so-called annuity loans. Every month, you pay the same monthly rate, your annuity. Often the last payable installment at the end of the term differs slightly from the other rates, but this is mainly due to rounding issues. However, the individual monthly installments differ in their composition.
interest and repayment
The rate consists of two components, interest and repayment. The interest component is always calculated from the nominal interest, the remaining debt and the period between two repayments. The redemption portion is the difference between the annuity and the interest. Each repayment reduces the residual debt, which also reduces the basis for the interest calculation. Thus, your interest burden decreases every month and the repayment share increases. A lower interest rate means a faster repayment at the same rate, with the same duration the monthly rate would accordingly be lower.
Credit rating, the unknown variable of the loan calculator
Credit, in simple terms, means how likely it is that you repay your loan in full and on time. Most people have a claim to actually do it right from the start. But life does not always go according to plan. For example, an accident, unemployment or a divorce can whirl up the plans. The risk that this may happen is banks are trying to estimate before lending. For this you use a variety of information.
These include, but are not limited to, your age, what your profession is, how long you’ve been employed at a company, how much of your income, what your spending, whether you’re married or not, and many other data points. In the end, the bank tries to estimate you as accurately as possible and to praise this risk. The higher the risk, the more likely it is that the bank will get back less money than you borrowed from it. Since each bank does this for its own calculation, the comparison with a loan calculator is worthwhile. The results of the loan calculator will ultimately tell you which bank suits you best as it best suits your risk profile. This is best recognized by the interest rate.
Calculate credit for installment credit
Before you actually start a credit comparison, do you want to know exactly how your financial situation develops with a loan, what is your optimal maturity, what rate you can afford and what the total cost is? Then you calculate your desired loan with a loan calculator. Of course, what matters here is your credit rating, which you must estimate by entering an interest rate. A good indicator for this is the inquiry of a Schufa self-information.
You can obtain information about your data stored at the Schufa directly from the Schufa. There you also recognize if there are any negative entries to your person. If your Schufa score is greater than 0.95, you can roughly assume that you can get a so-called 2/3 interest rate, which is the interest that two thirds of all borrowers receive on a particular type of loan. In almost every online loan calculator you find the indication of the 2/3 interest rate, since this is obligatory for the banks. § 6a of the German Price Information Ordinance (PangV) stipulates that the bank must always provide such a representative example with an annual percentage rate of charge when applying for its loan product.
Before contract conclusion: have costs in view
However, you should keep in mind that the loan calculator is not just about the obvious costs of signing a contract, but can incur costs over the life of the loan that have not been in the foreground when deciding on a installment loan, for example if you once again need more flexibility in repayments than provided for in the installment loan offer. For example, if you want to take a break of three months, but the loan only promises a free break of up to two months, you will not be able to incur costs previously calculated by the loan calculator. Therefore, use a loan calculator with special repayment. Below we have summarized a short checklist on which points you should pay attention to before concluding the contract:
nominal interest rate
The nominal interest rate indicates how your respective residual debt bears interest. It is also an indicator of how much the bank is assessing the risk that you will not be able to repay your loan, in part or not on time. But not only is your individual risk priced in, but rather your nominal interest rate is composed of five price components.
In addition to the nominal interest, the calculator Excel can be used to cover additional costs. These additional costs may be incurred through a brokerage commission, a residual debt insurance or other fees.
If both the nominal interest rate and all other costs are included in the total costing of your loan calculator, you will get the effective interest rate as comparison reference. This interest rate is particularly suitable for credit comparison because it leaves little room for manipulation and thus makes different credit offers comparable.
Payment protection insurance
A residual debt insurance can be a good hedge for one or the other, but this type of insurance is often very expensive and does not always cover all risks to the extent you believe. Therefore you should always consult an insurance specialist. If the conclusion of a residual debt insurance is voluntary, these costs are not reflected in the effective interest rate. Since the costs can still make a significant amount, you can include them in credit calculator Excel.
Most banks now waive a prepayment penalty in whole, in part or on specific payment dates. However, you are legally entitled under §502 paragraph (3) BGB (https://dejure.org/gesetze/BGB/502.html), a prepayment penalty, if you want to repay your loan early. You may repay your loan at any time, but if the remaining contractual maturity is more than a year, it will cost you an additional 1% of the outstanding debt. If the remaining term is less than one year at least 0.5%. Use loan calculator to test how a prepayment penalty affects your actual cost of credit.
After completion: balance and costs monitor
After a contract, the time of repayment begins. Again, there are some points to note that you should probably think of before. With an Excel Loan Calculator, you can also perform some simulations during the repayment phase. Here is a short, certainly not complete list of points to watch out for.
You should always know what the current balance is and how much you have to pay to repay the loan. You should first inform yourself how often and in detail you receive information about your loan from your bank, what it costs to repay it prematurely, and how you can adjust the repayments at what cost.
Flexibility in repayment
Not in a loan calculator is the flexibility in the repayment. These are mainly free intermediate repayments, the early repayment of the entire remaining debt, installment breaks, rate adjustments and maturity changes. These are the topics that banks offer, and you should first think carefully about which points are most important to you and include them in your decision to make a loan. For example, many banks limit the amount of free special repayments per calendar year to a certain amount, otherwise you would miss too much interest income. If you know that on certain dates you will receive cash receipts that you can freely dispose of, you should make sure that you are entitled to free special redemption possibilities in the amount of the expected incoming payments. This saves you interest costs, as you will see when entering in the credit calculator Excel with special repayment.
Not considered is the point of data usage. Although the new General Data Protection Regulation has strengthened consumers’ rights, you may have to click on a newsletter or agree that you may be contacted by the bank. Some banks are thus trying to convince the borrower to bundle all loans with a cheap initial loan offer. This can sometimes strain the post office box and nerves.
Additional Costs: Your Time – Installment Online vs. Online. Offline
Once you have dealt with the loan calculator, you will probably find that many online offers are cheaper than what you get in a store. This need not always be the case, but is usually explained by the higher costs that a branch operation brings with it. But with an online installment loan, it’s not just about the cost, but also about the effort you have to ultimately receive your payout. These costs are of course also not shown in a loan calculator, but should definitely be taken into account. Because finding documents, scanning or copying, the way to the post office, these are all things that cost you a lot of time. For example, with an online digital loan, you can apply for a loan in minutes without pen or paper. Often, you do not need more than a smartphone, your account access data for a credit check, and your ID card.