How to use a debt repayment calculator

A debt is an amount owing such as a cash loan, house loan as well as loan for goods purchased. It is a financial obligation which carries specific repayment terms to the debtor, thus a debt payments calculator is used to calculate how much money is required to pay-off the debt.

How to use the calculator

The information required to calculate debt repayment is the loan amount, initial deposit amount, interest rate applicable, repayment frequency, number of years to pay and any additional monthly payments. It will then be loaded onto the calculator to get the monthly repayment amount, interest amount and the total amount required to clear-off the debt.

Information obtained by using the calculator

The finance calculators will show the initial amount borrowed and the total amount to be debt-free. It reveals the interest amount and interest rate charge, the current number of debt repayment, the number of months or years to clear off the debt as well as the amount to be paid on monthly basis.

Why using a debt repayment calculator

The debt repayment calculator is used to determine how much money is required to clear-off the debt. The calculations are used for budgeting purposes and to know the exact amount that will be channeled towards debt repayment every month like mortgage repayments. The information helps to determine the time period to pay off- the debt, how much money can be saved by taking a loan, how to be debt free and when is it necessary to take out another loan. It is easy to see how much money is paid monthly on each debt. It is used to ascertain the cost of the debt,whether it is attractive to borrow and how much. This loan calculator analyses the monthly debt repayments and the interest rates. The use of a debt repayment calculator helps one to decide on which interest rate option to choose between the fixed interest rate and the floating interest rate proposal. A debt calculator is a free online service which can be accessed and used by everyone.

Disadvantages

The debt repayment calculation results are only estimates based on the information entered and vary with the changes in economic indicators like interest rates and monetary policies from time to time.