Borrowing tip: interest rate calculators
Paying interest is a fact of life. But you can limit the cost by using interest rate calculators. These online tools explain in detail the amount of interest you’ll pay on a loan, depending upon the terms of your financing. Interest rate calculators are very helpful, for instance, in determining how much of a home or car you can afford.
Here’s a look at the two most commonly used rate calculators Bankrate.com has to offer.
At first blush, you might think you can afford a $400,000 home, but that might not be the case if you are paying a point or two more on your mortgage. Before you start shopping, figure out how much you can afford, including interest.
The Bankrate.com How much house can you afford calculator will do the work for you. You’ll need to have handy information on your wages, the price of the home, the interest rate you think you will be paying as well as monthly expenses.
Bankrate.com also offers a mortgage calculator that will tally your monthly payment with interest and lets you play with the numbers to figure out how soon you will pay off your loan if, for instance, you make extra payments.
Auto loan calculator
Like buying a new home, knowing your monthly payment on a car will help you determine how much car you can buy. Figuring out the monthly payment is simple with the Bankrate.com auto loan calculator.
Enter the amount of the loan, length and interest rate, and Bankrate.com will calculate how much you’ll pay each month. Like the mortgage calculator, it can also tell you how quickly the loan will be paid off if you make additional payments.