An installment loan involves the responsibility of the borrower and, like any loan, must be fully repaid. Therefore, it is crucial that the loan sought perfectly matches your personal financial situation. In other words, the credit obtained should be repaid without compromising your financial balance. It is thus imperative to carry out a loan simulation. This means calculating your installment loan to avoid unpleasant surprises when paying your installments. The simulation serves this purpose by allowing you to choose a solution tailored to your profile. How can one calculate an installment loan in Belgium? This article aims to answer this crucial question.
Why Calculate an Installment Loan?
As mentioned from the beginning, the borrower assumes responsibility when requesting an installment loan. This means that when you benefit from a loan, you must repay it in full. That is why it is essential to know what you are committing to before signing a contract with a bank or an organization authorized by the laws in force concerning consumer credit.
The most effective solution seems to be loan simulation. This is a technique that allows you to get an estimate of the main features of the contract by viewing key elements such as the interest rate, the repayment term, the monthly payments, or the amount borrowed with just a few clicks. In no time, you can know if you’ll be able to repay the amount of money put at your disposal.
How and Where to Simulate an Installment Loan?
The calculation of this type of credit is an operation of great simplicity. This means you do not need solid financial knowledge to perform this task. Banks or other lending institutions provide you with powerful tools on their website for the simulation of your loans, including installment loans.
Effective, the simulators offered by lenders are appealing because of their ease of use. To obtain relevant information about your loan, you need to enter certain data where indicated. First, you must determine the amount you wish to apply for. The second crucial element to specify in the online form provided is the repayment period. Once these two pieces of information are provided to the simulation tool, you will immediately have other loan contract data such as the interest rate and the amount of the monthly payments due at fixed intervals.
As can be seen, the interest rate and monthly payment depend on the loan amount envisaged and the repayment duration indicated in the form. The following numerical example will help you understand better…
Consider the case of an individual who wishes to borrow €2,501 from their bank as part of an installment loan to be repaid over 24 months. The individual should pay a monthly fee of €117.52.
For the same amount sought and opting for a longer repayment period, 30 months for instance, the characteristics of the desired loan will change, and the monthly payment would be €96.70 with an interest rate of approximately 12.49%. This is why simulation should be done multiple times to find a loan perfectly matching your real situation.
Calculating your loan allows you to have a reliable amortization schedule that ensures optimal budget management. Thanks to this approach, which is done online, you will be able to compare offers from several banks and other lending institutions and make your choice with ease. This increases your chances of enjoying better loan conditions, including more attractive interest rates.
Good to Know
Banks and other lending organizations have loan simulators on their websites. You can use them for your loan estimation. However, there are also independent portals specializing in loan simulation, such as credafin.be.
It is also important to know that the calculation of your installment loan is intended to help you make the right choice. This is why you should not provide incorrect information. You will not obtain a reliable estimate if you do so.
Also note that a simulation does not engage you in any way. Feel free to perform multiple simulations at will.
For more information on installment loan calculation.
