How to calculate loan payments – Paying on time

One of the most important things that we should have in mind when applying for a loan is paying on tine and how to calculate loan payments

Loan payments are extremely important when it comes to maintaining a good credit history or building good relationships with a lender.

We never know when we will need a loan again, so it’s better to organize our finances in order to always pay on time.

Here, at Oxford Funding, we want to serve you as your trusted lender whenever you need a new loan. 

But it is essential for lenders to receive payments back on time so everything works as it should.

We can offer multiple products according to your needs here at Oxford Finance Services, as long as you meet the minimum requirements demanded by our policies.

Therefore, understanding how to calculate loan payments will help you have a bigger picture of your just received loan. Planning is one of the best ways to avoid falling into debt, so have this in mind before applying for an installment loan or any other type of loan.

There are many reasons why a person decides to get a loan. It might be because of a medical emergency, an unexpected problem, or simply to pay something without affecting their monthly budget.

Whatever your case is, you should always pay off your debt on time. 

We sometimes experience bad financial moments in our lives; it’s something normal that we are constantly trying to avoid. 

This doesn’t mean that you must get ahead and pay every single installment in just one month, but clearly, paying on time will bring you more benefits than you believe.

Psychological benefits of being debt-free

It is not a secret to anyone that eliminating debt is actually a great way to reduce daily stress. As we mentioned before, paying a loan as soon as possible is not always the best financial decision.

Some people hate paying interest to lenders, some people don’t like the idea of making monthly payments, and some people are just fine with it. It all depends on you.

Save money, improve your credit history

Paying off a debt earlier than you should, helps you stop paying interest rates. Basically, interest charges buy you time. If you can afford to pay right away, then do it. If not, it is better to just make the monthly loan payments on time.

Besides, when you manage to fulfill your duties as a borrower, your financial position grows. Financial institutions analyze this, so the next time you have to apply for a loan, your chances of getting a better deal will be higher.

As you might guess, it’s not the same to get a mortgage as getting a student loan. The interest rates, conditions, and requirements will be totally different from one to another.

That being said, it is necessary to know the most common loan payment formulas depending on the type of loan you got. There are multiple calculators to help you do this, but we’ll get to that. First, you must identify what kind of loan you selected. 

Amortizing loan

Imagine that you just bought your dream car. 

Finally, you have that sweet 50,000 USD Mercedes Benz you have dreamed of, and you financed it with an amortizing loan.

So, to calculate how much you will pay in the first month, divide the interest rate you are being charged by the number of payments each year.

If you took a loan with an APR of 6%, it would look like this:

0.06 divided by 12 months = 0.005

Then, multiply it for the total loan amount:

0.005 x 50,000 USD = 250 USD.

You will pay 250 USD in interest in the first month of your loan.

Interest-only loan

In this kind of loan, you will only be responsible for paying the loan’s interest for a specified number of months.

Calculating interest-only loans is more straightforward than many believe. Let’s take the last example, but this time you would take a 50,000 USD loan, 6% APR and you’ll repay it in ten years.

50,000 USD x 0.06 = 3,000 USD

3,000 USD divided by 12 months = $250 USD

You’ll pay 250 USD in interest each month. Once the interest-only period finishes, you will have to pay the principal borrowed amount.

Although it is not extremely hard to determine the interest rates of your loan payments, some people can still find it kind of difficult.

In this case, be sure to read all the details included in the loan contract. Your lender should specify everything you need to know before finally proceeding with the loan. Still, take a look at these fantastic loan calculators:

• • Personal loan calculator: to calculate a personal loan, the calculator takes your interest rate, principal balance, and repayment length to give you a grand total of your monthly payment.
  • Mortgage calculator: mortgages are also a type of loan. In fact, they might be one of the most important for many people, so it’s in your best interest to use this mortgage calculator to know your monthly payments.
  • Auto loan calculator: it is always good to be one step ahead when it comes to managing your finances. Using an auto loan calculator will help you determine the monthly payments of your future new car.

So, now that you have all the information needed to calculate your monthly loan payments, be sure to always pay on time!

Keep in mind that your financial status is highly linked to your credit history.

Hence, anticipating the amount of money you’ll spend on loan payments will allow you to never miss a single installment.

Avoid debt, keep your credit history in good shape, and see how your financial future will gradually improve!

Although it is not extremely hard to determine the interest rates of your loan payments, some people can still find it kind of difficult.

In this case, be sure to read all the details included in the loan contract. Your lender should specify everything you need to know before finally proceeding with the loan. Still, take a look at these fantastic loan calculators:

• Personal loan calculator: to calculate a personal loan, the calculator takes your interest rate, principal balance, and repayment length to give you a grand total of your monthly payment.
• Mortgage calculator: mortgages are also a type of loan. In fact, they might be one of the most important for many people, so it’s in your best interest to use this mortgage calculator to know your monthly payments.
• Auto loan calculator: it is always good to be one step ahead when it comes to managing your finances. Using an auto loan calculator will help you determine the monthly payments of your future new car.

So, now that you have all the information needed to calculate your monthly loan payments, be sure to always pay on time!

Keep in mind that your financial status is highly linked to your credit history.

Hence, anticipating the amount of money you’ll spend on loan payments will allow you to never miss a single installment.

Avoid debt, keep your credit history in good shape, and see how your financial future will gradually improve!