Loan calculation formula: types of debt repayment
Lending in our time is something out of the ordinarygoing out to call it difficult. Consumer loans for the purchase of goods, credit cards, short-term loans have become commonplace. If you look at the West, the whole America lives on credit, and the IMF generally provides loans to entire states. But let's look at the practical point of view of lending to an ordinary consumer. Here the most basic is the formula for calculating the loan when concluding a contract, which many borrowers in most cases do not pay attention. And this in the future can play with them a cruel joke.
The formula for calculating the loan payment: basic knowledge
Before giving the mathematicalequations, it is necessary to clearly define several concepts. The most important thing in any loan agreement is repayment of the loan's body, that is, compensation of the initial loan amount in full.
But it's just that the money is not a single bank orfinancial institution does not give. They, at least, demand for this to pay interest for the entire period of using the loan. By the way, if anyone does not know, this method was adopted by the Templars and Masons.
But that's not all. The modern formula for calculating the loan implies the elimination of risks associated with the hypothetical failure of the borrower to meet the funds set by the schedule. Therefore, in addition to the loan agreements include the cost of insurance, reservation, etc.
In fact, the formula for calculating the loan in the sense ofrepayment of principal, if it is made in equal parts, can look like the total loan amount broken monthly, that is, S / n, where S is the loan amount in the initial form, and n is the number of months (but not years).
If we start from the monthly payment withtaking into account the number of days in a year, the credit calculation formula takes on a new form. The loan amount is divided by the total number of days for the full period of its use, after which it is multiplied by the number of days in the current month.
For example, in a month there may be 30, 31, 28 or 29 days. Accordingly, the entire loan amount is divided by the number of days, and then in the current month is multiplied by the number of days.
How can interest be accrued
The formula for calculating interest on a loan in somethingsimilar to the above example. It is considered that the borrower pays interest only for the established period of using the loan (day, week, month, year). The percentage is calculated in different ways. It can depend on the number of days of the fixed period or be fixed (in this case, payment of interest is similar to repayment of the loan body).
However, if you follow the generally accepted rulesrepayment of interest for the full term of using the loan, the formula will look like the division of the loan amount by the total number of days in the period, after which multiplication by the interest and the number of days for which payment is to be made.
Some banks offer to pay at the end of the term. Again, the calculated amount of interest is broken down in terms of fixation.
But one of the most interesting and attractivemarketing methods is the accrual of interest on the balance of principal debt. Thus, the formula for calculating the loan (the body, although it is repaid ahead of schedule) remains unchanged, but the faster the main debt is repaid, the less the interest the borrower overcharges. In this case, the delta of the total and paid amount is divided by the remaining total number of days and multiplied by the percentage and the number of days corresponding to the current repayment period. But here some banks impose penalties for this. And this is understandable, because they lose profit.
The formula for calculating the annuity loan payment: what is the essence?
Annuity loans are classified asdifferentiated. In this situation, all payments related to the main debt are repaid in equal installments. At the same time, there are two types of repayment: numerando and postnumerando. In the first case, the main payments are made exactly on time or at the end of the period. In the second - before the scheduled date (as in the case of early repayment).
And payments of this type can befixed, attached to the exchange rate with the indexable inflation, fixed-term, open-ended, hereditary and t. d. The formula for calculating annuity loan can be shown in the simple example.
Let's say the loan amount is 100 thousandannual interest rate - 10%, and the loan term - 6 months. The monthly payment will be 17,156.14, but the interest will decrease. To calculate the total overpayment at some time, you just need to multiply the amount of the loan body by the number of months and otminusovat the full amount of the loan. In our case this is 17156.14 * 6-100000 = 2936.84.
Hidden items of loan agreements
Separately it is necessary to say that in contracts can be specified and points related to insurance of credit risks. They need to pay special attention.
Commission payment can be made initiallyor broken down by time, which can cause additional costs in determining the amount of the same monthly payment. There are also different kinds of commissions, for example, for issuing cash, for servicing a credit card, for SMS notifications for transactions, etc. But all this is also worth the money, and for some reason no one really thinks about these expenses.
Procedure for repayment of arrears
If there is a delay, the order is provided forsuch: first of all, past due interest is repaid, the second - the overdue principal payment, then - the penalty and penalties. If at the moment there is a regular debt, it is repaid after the expired, and the default interest is the last.
As we see, the formula for calculating the loan as a function offrom the situation can change. That's just the most important question is that in such bondage, even on the most favorable terms, it is not worthwhile to climb. No matter how attractive it may be, no financier will miss the opportunity to earn money. And, as a rule, including hidden payments and the state of financial markets, the average man will lose in any case.