By Guest Writer Robert Grazian:

If you are considering taking out a loan then you will understand that you are stepping into a minefield when it comes to calculations. It is easy to work out some of the simple math to see how much you can afford when it comes to repayments and interest, but it also very easy to get confused and forget some of the contributing factors which could make a huge difference to your repayments. Loan calculators have the benefit of being able to do instant calculations which will mean that you can shop around and confidently find the best deals available for your particular circumstances.

Repayments

There is no point in trying to work out what your repayments are going to be without taking the home loan interest rates today into account. If you are borrowing, for example, $5,000 over five years, then you could just assume that you will be repaying $1,000 each year. If only it were that easy. On top of the money that you borrow you will also have to repay quite a hefty sum of interest by way of saying “thank you” to the loan company. Loan calculators exist so that you can easily work out just what your repayments are going to be.

Variables

There are many variables when it comes to the rates of interest that are applicable to a particular eloan secure scheme. The basic interest rate as published by the banks will serve as the foundation for determining the interest rate for your loan. Other factors will then add to that figure. The amount that you borrow will be taken into consideration as will the length of time over which you plan to make your repayments.

Interest Rates

Often it is the case that the longer you take to repay the loan, the higher the interest rate will be. This is because you will be a greater risk to the company who have loaned you the money. The loan company will run various reference checks on you prior to offering you a loan and if you have a low credit score then they may increase the interest rate for your borrowing. Perhaps now you are getting an idea of why loan calculators are a good idea. They mean that you can enter all the information and variable from different companies who make you different offers so that you can see which would be the most suitable.

Loan Companies

As different loan companies will have different priorities when it comes to setting an interest rate for you, loan calculators are invaluable. For example, one company may offer to lend you the money at a high interest rate over a longer period and another at a lower interest rate but want the sum repaid in a shorter space of time. Without a calculator to refer to, you could easily make a decision that you cost you in the long run.

Find a Loan Calculator

It would be very wise to make use of the one of the many loan calculators which are available on the internet. Some loan companies do have their own as part of their website and some of the comparison sites also run a calculator. If, however, you are looking at a site that does not have one readily available, have a look in a search engine and find an independent one. There are plenty around and they really could save you a lot of money.  One good example can be found at HDFC Bank home loan calculator on this website.

J. asked:

I have good credit and stable job, and I just refinanced my current home at 4.65% fixed for 30 yrs and really lowered my payment. I’d like turn this current home into an investment property and then buy another home with zero or 3 percent down, 5 percent down, etc. Is it difficult at this time?

By Guest Writer Peter Kaestner:

The government of the United States has made it possible for students at the undergraduate and graduate level to be able to pursue tertiary education, thanks to PLUS loans and graduate PLUS loans. These gradplus loans have been made available to help parents with good credit ratings borrow up to the cost of attendance for their undergraduate kids. In the case of graduate loans, students wishing to pursue graduate studies can also gain access to funding to accomplish that. While there are conditions for acquiring either of these loans, meeting the criteria is very straightforward and has allowed many kids the opportunity to gain tertiary qualification.

For Any Expenses

PLUS loans can be used for just about any undergraduate related expense, including tuition, books, supplies and housing. The main factor is that financial aid from other sources would have to be deducted from the total amount needed, after which the PLUS loan is issued. What most people like about the PLUS loan is the fact that there are flexible re-payment terms, as well as the option to defer payments. This simply means that the parents can wait until their child has finished his or her studies before starting to repay the loan.

Discount Rate For Parents

There is also the benefit of a 0.25% interest rate discount for parents who enroll in an auto debit facility at their financial institution. Auto debit simply means that the bank would automatically deduct the loan amount each month from the bank account. Just enrolling in this program guarantees a 0.25% discount on the interest rate. And of course, these loans have a fixed interest rate of 8.5%, so parents do not have to worry about being surprised with increased interest rates.

Available To Students & Parents

In the case of student PLUS loans, these are available for graduate students as opposed to their parents. The students have the option to borrow an amount for books, tuition, housing and supplies. This loan along with the PLUS loan is a non-need based loan, which means you do not have to prove your need to be able to acquire this loan. All you simply need to do is ensure that your credit ratings are good enough, and the loan will be made available.

Consolidation Options

For both loans, there is the option to consolidate. Consolidating PLUS loans are really a debt management tool that enables you to combine your federal loans into one single loan. The advantage of this is that recordkeeping is simple and you just have to make one payment per month. Usually, consolidating federal loans allows you to have lower monthly payments by as much as 53%.  Plus loans enable students and parents to reapply for student loans in an efficient manner.

PLUS loans are very effective at helping young professionals to acquire the knowledge and qualification they need to be able to make it out there in the work world. If anyone you know is interested in tertiary education, but they feel they do not have the funding required to achieve it, you should advise them about these loan options so they can pursue their dreams.

Anon. asked:

I got a note from my financial aid office claiming they informed me that a lender I’ve been using for my Federal Stafford Loans (College Loan Corp) opted out of the student loan program and that I must select a new one by signing a new Master Promissory Note (MPN). The financial aid department gave me three lenders to choose from.  (See here for best Stafford loan lender)

How can this effect me–what should I look for in selecting a lender, and how is it that they–my aid office– can narrow the choices down to three? (Bank of America; PNC Bank; AMS Education Loan Trust). Which should I choose and why?

As I said, they claimed they sent me the MPN to sign at the end of last semester–they did not. Not they’re giving my an ultimatum that if I don’t get this done by the end of the week, I may not get any loans. What do you think of that?

This sounds fishy and weird to me–can I get burned by choosing a new lender–I mean, what’s at stake beyond the fact that I must get my Stafford loan to stay in school for my senior yr

The Down Payment Issue

A down payment in the range of 10% to 20% is usually required for obtaining a home loan to buy a house. There are also closing costs that you’ll need to pay in order to secure the loan. If you add up these two factors, very few can afford putting down so much money.

The financial industry, however, has found a solution to this problem and offers a new financial option.  0% down mortgage loans are meant for those who cannot put away enough money for a down payment. With these loans you can finance 100% of the property’s value. Moreover, for those who cannot even raise the money for closing costs, there are lenders offering 103% or 105% Finance Home Loans. The extra percentage is used for covering the closing costs which will then be included in the overall debt that you’ll have to repay in monthly installments.

Drawbacks of Lack of Down Payment

Zero Down Mortgage Loans sound tempting but though not having to put money down in order to purchase a house can seem to be a fabulous waiver, it has many drawbacks and unless strictly necessary, it should be avoided by all means possible.

A down payment has not only direct positive financial consequences but it also can be a positive factor when the lender has to decide whether to approve your loan or not and on what terms. When the lender has to consider your application, a down payment tells him that if you were able to save enough money to make a considerable down payment, you’ll probably be able to meet your monthly payments without any difficulty.

A down payment will also imply that you have the ability to obtain finance elsewhere and so, the lender will try to offer you a more tempting loan proposal in order to keep you as a client. Those who can offer a down payment always get a considerably lower interest rate than those who cannot.

As you can see, a down payment reduces dramatically the risk implied for the lender in the financial transaction, and thus, you’ll be able to get a better deal on your loan. A down payment won’t only reduce the interest rate you pay; it will also lessen all the other loan requirements and will turn the loan terms more flexible. You’ll be able to get stretchy monthly payments and larger loan lengths too.

Home Equity Loans

If you wanted to use that money for making home improvements or for other expenses, you don’t need to worry. Once the deal is closed, the amount you had to put down will become home equity and you’ll be able to request a home equity loan for the difference between your home value and the amount owed on the mortgage. These loans are secured and carry low interests; they are the perfect solution if you ever need the money you used for the down payment.

Reader Question:

kookoo4travel asked:

My sister is considering buying a house, but does not have much $$$ to put down. Is there a loan company that easily approves someone with good credit and a secure job? This would be in California CA.

Borrowing money when you have bad credit can mean a high rate of interest on the money.

Already the borrower is under the burden of bad credit history, another burden of high rate of interest can worsen the situation. This can be prevented by taking up money at low rate through poor credit secured loan.

Secured Loans For Anything

Through this type of loan, the borrower can take up money for fulfilling his personal needs like debt consolidation, home improvement, car purchase, wedding expenses, educational funding, medical expenditures etc. Bad credit can be a result of missed repayments, arrears, defaults etc of the borrower.

Your credit rating can be improved by timely repayment of all the debts and all the loan repayments in the future. By repaying bad credit secured loan on time, the credit history of the borrower can be improved.

How To Borrow

To borrow bad credit secured loans, the borrower needs to pledge some asset that he owns as collateral with the lender. The asset should have a high equity value in the market so that it can get a lower rate of interest. The low interest rate is offered by the lender as he is convinced by the retrieval of his loan amount at the end of the loan term.

dchalliday asked:

I need a loan for < $50K and am looking for the lowest rate, secured if possible but unsecured will do.

I have a credit score >650 and collateral. Cheers!