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How to calculate the personal loan?
Before hiring any type of financing, it is best that we know exactly how much we will pay. The first thing we have to take into account when we want to calculate the personal loan is that this type of product is affected by different factors that will cause its cost to change.
To know if it is a good offer, therefore, we will have to make the loan calculation taking into account that variables such as the type of credit, the way to return it, the term or the amount that we request will change the total interest we will pay. Even when interest remains similar, changing some of the aforementioned variables will change the total cost.
Therefore, when clarifying the cost of a personal loan we must know that it is not only a matter of knowing the APR but to take into account all these variables. That is why HelpMyCash has developed a free calculator to perform all these operations in a simple manner and clarify their results.
What is taken into account in the calculation of the loan?
When calculating a personal loan, as we said, there are different aspects that are taken into account. Next, we analyze each of them separately.
- The amount The amount of money that we will request is one of the most important factors and, therefore, all calculators will ask for it. In addition, other factors such as interest cannot be calculated without the amount.
- The interests They are the main factor, although not the only one. It is important to look at both the TIN, the percentage that indicates the loan interest, and the APR, the percentage that indicates interest plus other expenses such as commissions.
- Commissions. These formalization expenses are usually paid together with the first installment of the loan (the fewer commissions the offer has, the less economic effort the first installment will entail). They usually have a cost that ranges between 1% and 3% on the requested capital.
- Linked products Some loans require us to contract some products (such as insurance) in order to make the request effective. In this case, we must bear in mind that, if we have to contract a linked product, we will have to know that paying the fee for that link will also make us pay more in the final price.
- Term. The term of the reimbursement presented by a personal loan is another of the most influential factors that we can find when calculating its cost, since the interest on a loan will be generated according to the amount requested and the time during which we enjoy of credit The longer the repayment term, the more interest will be generated.
Taking all these factors into account, we can calculate without misunderstanding the final cost of our personal loan although, equally, it is always advisable to make a calculation of the personal loan that we want to hire to know the total cost that it will entail.
The cost according to the type of personal credit
Knowing each one of the factors that affect the price of a personal loan we could get an idea of what the final cost will be. According to their typology, in addition, the credits present some characteristics or others, therefore, their price will vary. If we want to find out its cost, therefore, depending on the loan that is, we must take into account some aspects or others.
The cost of minicréditos: its cost is around 1.1% per day, that is, to get an idea if you lend us 100 euros to 30 days this will cost 33 euros. Other features of the mini loans are:
- Minimum quantities. Because they offer a reduced amount of money, normally a maximum of 1,000 euros, depending on the entity and whether we are new customers or already registered customers.
- The return period for these quick mini-credits is up to 30 days. They are reimbursed in a single payment that couples the loaned capital plus the fees generated.
- Its concession term is between 15 minutes and 48 hours.
- Purpose They are normally used to obtain extra liquidity at specific moments and not as a usual funding source.
The cost of personal loans: these urgent loans offer a higher amount of financing compared to mini loans. Its cost, which is measured by the average APR in this type of quick loans, according to the Bank of Spain, is approximately 8.83 %. Other characteristics of personal credits are:
- Quantity. Depending on the entity, we can request between 3,000 and 100,000 euros.
- Their repayment periods usually range from 3 months to several years and we can request them from both private equity companies and banks.
- Its concession term is around 48 hours in personal loans online, although if we go to an entity, the “traditional” personal loans could take between one and four weeks.
The calculation of the personal loan is not so simple. That is why we recommend using the free calculator found in the previous section. If we do not want to make mistakes or do not want to have last-minute surprises in the cost of our credit, it is best to calculate it with this tool.
Errors when contracting the term of a personal loan
When we choose the term of a loan, we not only have to think about the cost that will entail. One of the most common mistakes is, for example, to put a repayment period too long to pay less in our monthly installments. We must know that this will cause more interests to be created since in each quota some are created. That is, the longer the repayment term, the more interest will be generated because they depend directly on the amount requested and the time in which we use it.
Another common mistake is to want to take off the loan so soon that too high odds are chosen and too short a term. In this case, what ends up happening is that we can not face the sum that the quota supposes and we end up with liquidity problems. If we calculate the personal loan in advance we can avoid surprises of this type. So, when hiring the term of our personal credit, therefore, the most important thing is to choose the one that allows us to meet the monthly payment without causing problems.