A loan is simply a token of contract between a borrower and a lender, where the borrower receives an amount of money as principal amount which he is obligated to pay back later after the completion of the loan period. More than thousands of loan types have been invented since its creation. Payback is the method followed by all financial institutions providing different kinds of loans. The calculators that address these disputes are categorized into three types. There is also a specialized kind mortgage calculator, auto loan calculator, and lease calculator. By the method of payback, most loans can be categorized into the following types:
1)Pay back a certain or fixed amount as equated monthly installments periodically, until the maturity of the loan:- There are lots of consumers loans that fall into this category, such as mortgages, auto loans, student loans, etc. With this kind of loan scheme, you only require to pay part of the principal amount and interest with each equated monthly payment. In the first type Loan Calculator as seen, the marked points indicating the principal amount, the interest payment rate, the number of payments whether quarterly, semi-annually or annually, and the total interest which is to be paid to the lender. You can determine and get an idea, by differentiating the interest rates for the same period of time. And what the differences are in between the various offers made by the lenders to the borrowers?
2)Pay back the total amount to the lender after the completion of the lending period:- In simple words, when the loan amount matures, the borrower is obligated and determined to pay the principal plus interest back to the lender in one large and bulk payment. In the second type Loan Calculator, the principal, and the total interest payment are being indicated with different colors. You can determine from this concept, by differentiating the interest rates for the same period of time, what the differences are in between the various offers made by lenders to the borrowers.
3) Pay back a fixed amount, also called the face value of the loan at the end of the loan duration:- This type of loan is rarely made except in the form of bonds and stocks. When you buy a bond or a stock, you pay a fixed amount as token. At the end of the maturity of the loan, you get that amount back. But, for the same period of the loan, you would receive interest payments. The third type Loan Calculator shows how the interest is calculated against the principal amount.
Commercial loans are loans that are more often made on the basis that the principal is repaid in full amount at the end of the life of the loan, while the interest is to be paid throughout the loan period. Loan Calculators cover this form of loan. Whether you borrow for yourself or your family, or for your business, there are essentially and basically three kinds of loans that you can make. The loan calculators can make you understand the conceptual formula of how to determine the costs.