Why Should I Use an Amortization Calculator

Why Should I Use an Amortization Calculator? Many people are overwhelmed by the sheer number of personal finance tools online. There is an amortization calculator for just about every loan product under the sun: mortgages, student loans, credit cards and auto loans, to name a few. How do you choose which one to use if there are so many options? And what is an amortization calculator, anyway? An amortization calculator is a tool that helps borrowers understand the details of their loan. It calculates the monthly payment, interest rate, and total amount of interest paid over the life of the loan. This information can be helpful in budgeting and planning for future expenses. There are many reasons to use an amortization calculator. 1.Begin with, an amortization calculator can be used to compare different loan products. A far cry from the old days of borrowing, today's borrowers have an array of options on how they can finance their purchase or refinance their debts. Shoppers need to understand what each loan entails and how it will affect them financially before making a decision. 2.An amortization calculator can help with that. It breaks down the monthly payment, interest rate, and total amount of interest paid into an easy-to-read format. 3.Another reason to use an amortization calculator is to calculate your debt-to-income ratio (DTI). Lenders use this figure to assess your risk as a borrower. The DTI takes into account how much debt you have compared to your income. 4.An amortization calculator can help you figure out your DTI so you know what kind of loan products you qualify for. 5.Finally, an amortization calculator is a handy tool to have in case you need to make any changes to your loan. For instance, if you need to borrow more money for a major purchase, an amortization calculator can help you figure out all the implications of that decision. This way, you know exactly what kind of monthly payment to expect and how much that additional borrowing will cost. The same goes for refinancing or paying off your loan early. An amortization calculator can help you estimate how much interest you will need to pay over the life of the loan, which might affect your decision to refinance or not. These are just a few examples of why you should use a loan amortization calculator when planning for future financial decisions. There are many more possibilities, so make sure you understand the world of personal finance with an amortization calculator by your side.