If you are qualified for a personal loan, your lender will likely provide you with detailed information about repayment terms, which outlines the total loan amount, how much you must pay, and when you must pay each month. As a borrower, the monthly payments of the loan over a given period and the interest adds to the total amount owed should be the primary things to consider.
Since personal loans often come with monthly payments, knowing how to calculate the monthly installments can be beneficial and substantial during the process of the personal loan application. By performing these calculations, you will be able to better grasp the true costs of loans and evaluate alternative financing choices.
Calculating The Monthly Payment For Your Loan
If you would like to calculate your existing personal loan payments or you are browsing offers from multiple lenders and trying to estimate the try monthly cost, you can use the following formula:
In this formula, “a” stands for the total loan amount, “r” stands for the monthly interest rate, “n” stands for the total number of payments, and “p” stands for the estimated monthly payment. Most lenders will give you an APR rate, short for annual percentage rate, instead of the exact monthly interest rate, so all you need to do is to divide the APR rate by 12 and you will get the monthly interest rate.
To better explain the formula, take a $10,000 loan with an APR of 6% and a 2-year (24 months) repayment period as an example. The monthly interest rate can be calculated by dividing the 6% into 12 months, which will get you 0.5%. Then put all the numbers into the formula, it looks like this:
As a result, the monthly payment for a $10,000 loan with 6% APR and 2 year repayment period is around $443.20.
Note that the actual monthly payments may vary between lenders, and the purpose of the loan calculation formula is to perform a basic estimation before you confirm a loan offer. There are also loan calculators on the internet that will do the math for you. Simply enter the interest rate, loan amount, and duration of time you'll be planning to pay on the loan, and you will get a monthly payment result instantly.
Installment Loan Alternatives
If you are not that interested in getting monthly installment loans, or you are not bothered by these math calculations, we’ve also rounded up some alternatives for you.
A payday loan can be obtained online or at a cash deposit lending facility. If you can demonstrate sufficient income, you may be able to avoid the hard credit check. In most cases, you will have up to one month to repay the payday loans all at once, and most payday loan lenders will not accept installment repayments.
A pawnshop will provide you with a secured loan if you give something of value as collateral. Your lender will most likely only give you up to 25% of the item's worth. You will also need to repay these secured loans in a lump sum, and if you fail to repay the loans, lenders will forfeit your pawned item.
To explore more loan options and financial solutions that suit your needs, you should take a look at online loan brokers like iPaydayLoans, WeLoans, US Title Loans, CashAdvance, and BadCreditLoans. You will find various alternatives through their online platform, and you can get up to $35,000 from many of these websites as soon as the next business day, with minimal requirements that even terrible borrowers can still get approved.