A loan calculator’s function is to give you an idea that after borrowing a loan, will you be able to return it. In a loan calculator, you can calculate the number of payments you have to make from your income to pay off the loan. It will give you an idea of how much you should borrow, and how long it will take you to pay it back according to the interest rate it is borrowed against. It is very useful to have a loan calculator when you are trying to choose from multiple loan offers.
Through loan calculator, you can determine which loan along with fees, interest, and the principal amount would be most affordable to pay off in your income structure. Loan calculators have been built for many sorts of loans like a mortgage loan calculator or auto loan calculator. All these loans have different variables; hence their structure and formulas vary, but the basic function is the same.
Business loan calculator
A business loan is an amount borrowed to start your start-up or to buy machinery, or for expansion or franchising of the business. There are various credit and loan systems given out by the banking and finance sector. You can use a business loan calculator to determine which loan suits you best by what you earn and able to payback. Short term business loan calculator is based upon the same basic structure as a loan calculator.
It will help you figure out how much you can pay every month according to what you earn. Also, what will be the total amount of the loan you have to pay back with the loan fees, interest, and principal amount. What should be the number of your payments and how you will be paying back. Business loan payments can be weekly, fortnightly, monthly, or quarterly. Weekly or fortnightly payments help you pay off loans pretty fast, but you should be very sure that your income can cover the payments. Defaulting on the payments only increases the markup and spoil your credit score. Monthly payments are the normal practice as for quarterly payments, the amount that needs to be paid increases by a lot.
Benefits of business loan calculator
1. You can compare your options with ease:
You can put in the different amounts, interest rates, and periods of the payments and calculate the amount you have to pay back. In this way, you can personally compare the programs offered by the multiple institutions and choose the one which is most feasible for you. Feasibility can be based upon the interest or the time they may providing to pay back or the principal you need. You can be the judge of that.
2. It helps you plan your business decisions according to your finances:
The business loan calculator will give you the exact amount you have to back and the period you will be engaged in paying back the loan. This will help you plan your business expansion or investment decisions. You will be aware of your future finances in advance, and that will help you avoid any financial hiccups. You will know how much you can expand according to your finances. If you will be able to invest or not while making the payments.
3. You can prepare your income sources:
Once you are aware of how much you have to pay back with interest, you will be able to start arranging the money you have to pay back. You can re-arrange your spending situation in advance to avoid any problems later on. You can also think up of contingency plan if your normal source of income for some reason stops or is halted temporarily.
4. It is easy to use:
It is very simple to use. You only need to know the numbers to use it. Anyone can use it. An amateur can use it. It is available online and free to use. There are many kinds of calculators available. Some even offered by institutions that are giving out loans. As there are multiple types of calculators, you can pick the one that supports your parameters and get to work.
5. It is a trustworthy application:
It has removed dependency on the third party to solve loan problems. By using this, the chances of getting a loan that is unsuitable to your situation also decrease by a lot. Or the chance of getting duped and being sold a wrong type of loan have relatively fallen. You can decide for yourself and know what is best for you. You are not dependent upon the salesperson to tell you if it is good for you.
6. Makes you aware of how much you will be spending over the years:
Some loans come with compound interests. Many people have trouble understanding what that is. It means that interest will increase over the years in lay-man terms. This type of interest is usually hard for people with no background in finance to understand in theory. However, through the calculator, you can see how much interest you will be paying against the principal increase over the years. This way, you would not be surprised or caught unaware when the payment amount increases the following year.
Summations
A business loan calculator is doubly useful for people with small businesses looking to expand or improve their business. They are well aware of their incomes. So whenever they borrow a capital, they can be sure that it would be something that will be manageable within their income structure. Business loan calculators are a blessing of technology. As the number of small businesses has increased so, have their needs and woes. A business loan calculator can save owners from bad loans and credit programs. Help them reach such programs that will be easy for them to bear and also help them expand their business. Most of all, as these calculators are mostly completely free of charge, it saves the small businessmen the expanse of consultation to determine which loan will suit their system best.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.