Finance Calculator - The Pros and Cons 

A finance calculator is intended to be a quick and easy means of calculating how much a loan will cost you each month.  You simply enter the amount to you want to borrow, the term of repayment that suits you best and the current interest rate, and then click the button.  The result is how much you will have to pay each month over your chosen term.

Variables Of a Calculator

That is how the most basic finance calculator works.  However, there are variations that can provide you with any of the variables as an answer if you fill in the other boxes.  For example, if you have a maximum monthly repayment sum that you can afford, the finance calculator will tell you the maximum loan available you can get for that repayment sum.  Either that or it will let you know over how many years you will have to pay a loan if you enter the sum you need and the maximum monthly repayment amount you can afford to pay.

For example, if you want to borrow 10,000 over 5 years at 7.9% interest, the calculator will give you a monthly repayment of 200.99.  However, if the maximum you can afford to repay monthly is 170, then the same calculator will inform you that you can borrow 8,548.24.  Similarly, if you need the 10,000 at 170 monthly, you will find that you will have to pay that for 6 years 2 months.

You can use calculators from different loan companies to find the cheapest loan, although the calculations will all be exactly the same at the same interest rates. Where there are differences, it will be due to differences in interest rate.  Some more advanced calculators can take special offers and also charges made in setting up and closing the loans into consideration, but at the end of the day when the variables are the same, the calculators will provide you with the same results.

Finance Calculator Interest Rates

One factor to keep in mind when using a loan calculator is that it assumes that the interest rate will remain constant throughout the term of the loan, and also that the repayments will remain constant.  However, they are useful in providing a borrower with an immediate indication of approximately how much a loan is likely to cost. It is a quick and convenient of way of calculating how much a loan is liable to cost, and whether or not it is worth proceeding. If you are thinking of a loan to buy a new car, a boat or even a home, a calculator can allow you to plan ahead and save for a deposit that will allow your maximum possible monthly repayment secure the car, boat or home of your choice.

Calculator Repayments

Some finance calculators work out the long term costs of loans that start off with low repayments that increase later as your earnings improve. Finance calculators such as these are of particular help to you if you fail to read the fine print. They are generally programmed to take any 'fine print' conditions into account so that you will not get a shock.  Many will also calculate your repayments under optional repayment conditions, and inform you not only of the monthly repayments and the way they change over time, but also of the total repayment you make in relation to the borrowed amount.

However, a major disadvantage of these financial calculators is the absence of any form of personal contact. Without a discussion regarding the best type of loan, or loan terms for your specific circumstances, then you could end up paying more than you need, or even worse:  with a loan that is not appropriate to your needs. Financing is a very personal thing, and it is possible that standard plans can be modified to suit your particular needs. Without personal contact this is not possible.

That is why many finance companies will request your contact details prior to allowing you to use their calculator.  It might seem unnecessary to you, but in fact the company has your best interests at heart.  And their own of course, because it is to the benefit of neither party if you are stuck in a loan agreement that is neither appropriate for you nor affordable.  The limitations of the input data requested by a finance calculator rarely allow a true picture of your needs and circumstances to be clear.

Finance Calculator Disclousures

A finance calculator is not a finance guide, and can be misleading. However, if you get the right company, and they make contact with you when you use their calculator, then it is possible for you to get the best possible financial package for your needs.  They are not being intrusive, but trying to make sure that you get the best deal possible, because in the final analysis that will be to their advantage as well as to yours. 

However, if you are simply using a finance calculator to compare different loans, they are useful, although a simple comparison of interest rates would achieve the same thing - at least for the simpler calculators that most of those you find online are. It is always useful to know how much car or boat finance will cost you, especially when you can find out how much you have to save up first before you can buy the machine of your dreams with a loan you can afford.

If you are looking for a loan calculator you might want to try these sites:

Boat Loan Calculator   Car Loan Calculator   Equipment Finance Calculator

Home Loan Calculator  Truck Loan Calculator    Boat Finance Calculator