4 Steps to Calculate the Total Cost of a Loan
Whenever you plan to borrow money in the UAE, you must be aware of the loan’s cost that you will repay. All fees and repayments of the loans are always added to the terms. So, there will be no confusion between the lender and the borrower about the repayments. But, mostly, the borrowers do not understand the terms. So, they have no idea how to calculate the total cost of a loan. Here, we are describing the information of this question, so all borrowers easily know the overall costs of different debts.
Numerous lenders also assist their clients by giving them awareness of the loans’ costs. Karz is also one of the fabulous money lenders in dubai that offers loans' facilities at the lowest rates, so the total costs of all loans are lower as compared to numerous other lenders. They also provide the service of a calculator and you can know the amount of debt’s repayment and other costs through the online use of it.
Factors of the Loan’s Cost
There are certain terms that you must know before applying for a loan. These factors have so much impact on deciding the cost of a loan that you have to pay all over the repayment period. The lenders demand the repaying of the debt in the form of monthly installments, but with these installments, other charges are added.
Fees:
Almost every type of debt comes with specific fees that all borrowers must pay in order to get funds from the lender. It makes a borrower eligible for the receiving of the debt. There are varieties of fees for debts like processing, origination, late fees, etc. The origination fees will automatically add to the overall debt amount. For example, if you avail of a loan of ten thousand AED and the origination fee is 4%, the amount for repaying is 10400 AED.
Interest:
The interest rate is an additional amount that will be combined in the repayments of every month. Some borrowers choose a fixed rate and some choose a flexible rate. The flexible rate depends on the conditions of the financial market and then increases or decreases the rate accordingly.
Principal:
The lenders also include the term of principal in their loan’s terms. According to this term, the borrowers pay an amount every month, and that paid amount acts as the loan’s principal balance.
Repayments:
The tenure decides when you sign the loan’s contract papers. It is a period of paying off the debt’s monthly repayments. In general, the term of repayments is up to four years but it also depends on the amount. The interest rate will be paid with all repayments.
How to Calculate the Total Cost of a Loan in 4 Steps?
For the determination of the total cost of a loan, you will need to follow the below steps accurately. When you apply for any loan, Karz provides the complete details of the loan and are cost with the fund. As a result, you will not need to work on the calculation process of the total debt cost that you want to obtain from the lender. However, we are mentioning the easier steps that will help you with the knowing overall cost of the debt. After knowing these steps, you will efficiently add the details in a loan calculator online or do it by yourself through the utilizing of a formula:
1. Find out the Exact Debt Amount
In the first step, find out the exact debt amount that you borrowed from the lender. All lenders have also different criteria for lending. It is essential that you meet their criteria and then you will be able to get a debt of your choice. All those borrowers, who have good credit scores; easily get a chance to apply for any amount of the loan.
2. Check the Interest Rate of Different Banks or Money Lenders
The interest rate is not the same for every loan amount; it is changed from lender to lender for the same amount. With monthly installments, you will also pay the interest rate. Normally, the banks or lenders include the interest rate in the loan’s terms on an annual basis. For instance, if this rate is 12% annually, the interest amount for every monthly installment is 1%.
3. Formula to Calculate the Cost of a Loan
Now, just multiply the annual interest rate with the debt amount. The resulting amount will then be divided according to the repayment months that become your monthly payments.
4. Processing Fee
Now, the last step is to add the charges of any other fees like processing, etc. that you will pay.
Utilizing an Online Calculator
Moreover, the online calculator demands the details of the loan amount, interest rate, and repayment period. When you know all these things, you will not face any difficulty in using this calculator because these are basic factors that a calculator will ask from you. Karz.ae is also offering personal loan emi calculator UAE to its customers. then you can check personal loan emi calculator UAE using Every lender has their own official websites and they offer their services through them also. Therefore, to provide online lending facilities, they offer an online calculator service. Thus, the borrowers easily know how much they require the repay the debt. It is an easier as well as ideal way to find out the costs of different types of loans that you must know when repaying the debt amount.
