search facebook-square linkedin-square twitter envelope

When it comes to loans, as consumers we’re often most concerned with the loan amount and the monthly payment.

However, there are several other factors to consider before taking on debt. These factors are most often included in personal loan calculators offered on many financial advice websites.

The best of these calculators will allow you to see the interest rate, loan amount, monthly payment and the length of the loan. Others might include upfront costs such as origination fees or closing costs.

You might also want to see an amortization schedule breaking down how much of each payment will go toward interest, and how much will be paying down principal. When you first start paying off a loan, you’ll typically be making a smaller dent in your loan principal than you will by the end of your loan term.

Bankrate.com offers a wide variety of calculators for different types of loans, from personal loans to mortgages, that include amortization schedules. Note that the factors change for each type of loan, depending on whether it is a mortgage or debt consolidation loan.

By tweaking the interest rate or other factors, you can quickly have a rough estimate of how much a loan will cost in terms of interest and monthly payments.

Consumers should be cautious when using personal loan calculators because in many cases, these tools are only providing estimates that don’t reflect the actual rates terms offered by lenders.

Lending laws vary from state to state, so there may be additional factors based on these regulations that will affect the numbers. Your lender’s own underwriting parameters will also affect your final loan amount.

While you may estimate the interest rate for the personal loan calculator, this is a piece of information that is not defined until your loan’s terms are finalized with your lender.

Understand that these calculators take the most basic pieces of information and use them to estimate payments. Other calculators can be used to input a payment amount and then estimate the length of the repayment period. Still, as we have noted, these calculators are not foolproof.

Some of these calculators can assist in understanding how to reduce debt as well. For instance, credit card companies are now offering a calculator that allows you to input your current balance and various monthly payments to determine how long the repayment period will be.

One example is NetDebt.com. This website offers calculators to assist in making decisions on how much to contribute to savings, paying down credit card debt or just debt in general and even a debt ratio calculator.

While you are just getting an estimate from these personal loan calculators, they’re helpful because you can try several scenarios and get an idea of your comfort level in terms of payment size and loan term. You can save money by knowing how much you are willing to spend on a monthly basis without negatively impacting your lifestyle and current budget.

When you go shopping, having your budget in mind will help you resist any high pressure sales pitch for larger loan. These calculations will not adjust for your credit score and the impact that has on your interest rate.

So be prepared for some differences in the final monthly payment and loan amount. Use the calculator to find the range you are comfortable with. If the sales pitch goes outside that range, then you should be willing to turn that down the bigger loan amount.

Remember that personal loan calculators and debt calculators are tools that can help you better understand your finances, but they are not as definitive as your loan terms with your lender.

Credible is a multi-lender marketplace where lenders including Avant, LendingClub, PAVE, Prosper and Upstart compete for your business. You can compare personalized offers from multiple lenders on Credible.com without sharing your personal information with lenders or affecting your credit score. Tracy Sherwood-Knepple is a business and finance writer. She holds a degree in mass communications from Indiana University.