Many times in our lives, we need to make decisions on issues that are not exactly our main area of expertise. For example, whether to accept or to deny some kind of recommendation from the doctor about a medical treatment. Another example would be if we have a legal issue, then the natural thing to do would be to seek help from a lawyer.
Economic matters can also be rather complicated. Preferably they should be handed over to a professional for advice. This is especially true when it comes to large transactions, such as a decision regarding a mortgage while purchasing a house. With smaller things, there is no point in turning to a professional, we just have to make the decision ourselves. That is where the loan calculator comes into use.
While talking about a loan, it does not matter if we are dealing with big or small loans. There is always a need for advanced mathematical knowledge in order to analyse all the details. This includes the calculation of the interest, the costs and the comparison to various other offers. Seeking the advice of a professional when talking about a short term loan of a few hundred pounds, or even a few thousand, is not practical.
Years ago, the only solution was to “find” a good neighbour, a relative or a friend who understood and could advise in financial matters. Today this is not necessary anymore. It is possible to find online loan calculators, which contain all the necessary knowledge, and relieve us of the need to be mathematical geniuses. All that is left to do is find such a calculator, enter the data and get results. Let us see what types of calculators exist that can help us.
Playing with a loan calculator allows us to observe some interesting behaviours. If you pay attention to these details, you can save money – and a lot. For example:
When increasing the amount of the loan, the amount of the payments will increase accordingly. If, for example, we double the sum of the loan, any payment will doubled as well. This is a very logical and intuitive result, and in fact, we would not expect anything else.
Now, let us double the amount of the payments. We would assume that this would make each payment half the size. However, the reality is different. The payments are not reduced to half their original sum, but to much less. This causes the total amount of money due to be larger, and hence to loan to be more expensive. Intuition fails in this case, but mathematics strongly supports this phenomenon. What can be learned from this is that there is a limitation for the amount of payments that a loan is worth being paid over. As long as the loan becomes longer, it also becomes more expensive.
In conclusion, we can see that the proper use of online loan calculators can show us exactly what we will face ahead, and how to save money.