If you are unsure of the effect of debt interest or how much the monthly repayments are going to be each month, it is advisable to use an interest rate calculator to check. Alternatively, you may be attempting to work out how much interest you will receive if you leave money in 90-day online savings accounts for a few years.
How to use an interest rate calculator
Enter the amount of money that you plan to borrow or save. You may find that there is a cap on the amount you can save in an account. However, this will only affect the wealthiest investors. Unsecured loans are normally capped at £25,000. Term of the loan
When you are saving money, the longer the investment term or period of notice, the better online savings rates will be. This does not apply with unsecured loans because it increases the amount of time which the borrower has to default on the agreement. Annual Percentage Rate (APR)
You will tend to find that the cost of borrowing is higher on a five-year fixed rate mortgage. This is because it is far more difficult for the lender to calculate the direction interest rates are going to move when the term is extended.
What is your interest rate calculator telling you?
Term is incorrect
If you can afford to pay back more each month, you may be in a position to reduce the repayment term. Conversely, if you are really pushing yourself to the limit, you should consider repaying over a longer period of time or reducing the amount that you borrow. The priority is ensuring that the repayment schedule is affordable so you can continue to make payment. Interest rate is too high
If you have a bad credit history, the cost of borrowing will be a lot higher. You should only borrow money for emergencies and essential items. When your credit improves, look for the best home mortgage rates. Remember to compare mortgage and loan interest rates at a price comparison site, such as Moneysupermarket.com. Amount you borrow
The best personal loan rates are available to people who borrow between £7,000 and £15,000. Changing the principal is likely to effect the cost of borrowing. The more equity available in your property, the lower the home loan rate. You will need more equity in your property to get a secured loan if you have a bad credit rating.