The last days are spent in search of bank in order to take the most suitable loan and the most important thing is that the interest rate for loan use should be small. Search of information in Internet, visits to several banks, talks with managers. And at least the choice is made, there is found the bank with special offer 'your loan with minimal interest rate'. At the posters and advertisements there is written with huge letters the miserable interest rate and only at the bottom, with small letters there is provided the information about monthly commission.
The annual interest is not great and it is very attractive, but the established commission charge confuses and it is very difficult to understand how much you should really pay on loan. But after you repayment schedule is printed out you have all the necessary information. Except one thing - how much interest per year it will in fact? And probably, in another bank, where there are absent commissions and obligatory additional payments the loan offer will be more attractive. How to check and compare the loans?
Let's try to clarify. One necessary condition is the loan repayment according to the annuity scheme. Let's solve this problem with the help of loan calculator, but in this case the common loan calculator will make little use, we will need it later, to compare the results. At this stage we need the calculator that may carry out reverse calculation; such reverse calculator calculates the annual interest rate from the known loan amount and known monthly repayment amounts.
If you know the total loan amount, loan term, periodical repayments amount, then the calculator with reverse calculation will help you to define the real annual interest rate.
As it has been mentioned above, our loan is annuity, thus we have to pay the same amount per month that also includes the commission amount. Bank must give you repayment schedule with interpretation of amounts, where there should be indicated the loan amount and additional commission amount. It will be easy to record the necessary total amount, monthly payment amount and loan term into the reverse loan calculator and to carry out calculation. As a result, you will obtain the actual annual interest rate, proposed on the loan, as if you have taken the loan with any commission and obligatory charges. Perhaps the attractive offer of this bank with its small percents does not really differ from the other offers. And perhaps vice versa - this offer will be really advantageous for you and it will be worth using such opportunity. In any case, it is better to check. But before you make the final decision, ensure your calculations are correct. Carry out calculation in the reverse calculator according to the already known to you real loan line. You may use for calculation any previous loan or information, obtained from another sources.
In case of short-term loans, banks used to specify monthly interest rate and to withhold the annual interest rate. It is clear that the monthly interest rate will be considerably smaller. Calculation of annual interest rate in such case is very simple - it is necessary to multiply the monthly percents by 12, i.e. number of months per year. And vice versa, to convert the annual interest rate into monthly one it is necessary to divide it by twelve.