Do you want to renovate your home or finally book the journey of your dreams but you do not have enough liquidity at your disposal? The personal loan is a valuable ally in these cases, because it allows you to immediately get the money you need from a credit institution, which you will then have to repay in convenient monthly installments. But what will be the amount of these installments ? If you are willing to calculate the amount of the installment of a personal loan, this is the article for you.
Before requesting a personal loan from a credit institution, it is advisable to calculate in advance what will be the actual amount of the installments to be paid . This is very important not only to understand what is the most convenient loan for your specific needs , but also to verify that the amount that will then be paid monthly to the bank is not excessively burdensome with respect to your personal income. In short, it is good to make sure that you are able to repay the bank before signing a contract of this kind.
What are the factors that must be taken into account
To calculate the installment of a personal loan , several factors must be taken into account. First of all, you need to know the exact amount you want to borrow, the number of installments you will have to pay and their frequency over time. Furthermore, indicators such as TAN and APR are very important. The TAN – or Nominal Annual Rate – indicates the interest rate applied by the bank to the personal loan. In other words, it indicates the annual gain that the bank derives from the loan within a year. In the event that the sum of money obtained by the credit institution is repaid through monthly installments (or even at different intervals) the effective rate will be different from the nominal rate: this is because the debtor will pay a small portion of interest at each installment.
The APR – or Global Effective Annual Rate – instead calculates the total annual cost of a given financial transaction . Precisely because of the fact of calculating the cost of the loan as a whole, therefore including any additional expenses related to the loan application itself, it is also called a synthetic cost indicator . Thanks to this indicator, everyone can evaluate the actual convenience of the loan according to their specific needs. In case the TAN of two different loans is equivalent, the one with the lower APR will certainly be the most convenient.
How to calculate the installment amount effectively
To date, there are numerous sites that allow you to automatically calculate the amount of the installment of a personal loan . What you need to do is enter the amount of the loan, the frequency of the installments and the interest rate, in which it is convenient to insert the APR to calculate immediately all the additional expenses in the amount.
For example: if the loan amount is 15,000 euros to be repaid in ten years by monthly installments, the APR is 13% , then the installment will be 223.97 euros per month. The total cost of the loan would be € 26,875.93, of which € 11,875.93 in interest. If you want instead to evaluate the convenience of various personal loans offered by different lenders, you should take advantage of the various sites that compare the different offers. Enter the amount you need and the site will show you the various options you have.