Free Loan Calculator for Your SmartPhone
Many people have smartphones now. In many cases, it is helpful to have a loan calculator on your smartphone. This comes in handy if you are get a loan from your bank, buying a car from a car dealer, or buying or refinancing a home mortgage.
The interest calculations are complex and can not be easily performed using a simple add/plus/multiple/divide calculator. You need a financial calculator with interest formulas built-in. But better yet, get a loan calculator app for your smart phone, many of which are free.
Karl's Mortgage Calculator
One such free app for Android phones is "Karl's Mortgage Calculator" by drcalculator.com.
It allows inputs for principal, interest, years, and monthly payment. And has optional inputs for "down payment" and "property value".
Let's take a simple example of a car loan for $20,000 at 6.99% APR interest over 5 years. What would the monthly payment be?
You enter 20,000 for the principle. "6.99" for the interest and "5" for the years. Put a checkmark next to the "payment" field and it gives you the answer of $395.93 as your monthly payment.
You can try out different scenarios by entering 3 for the years, the calculator re-computes the monthly payment to show you that a three-year loan would increase the monthly payment to $617.45.
Or let's say that you can only afford a monthly payment of $500, what price car can you afford? In this case put a checkmark next to the "principle" field for the calculator to compute. Enter interest of 6.99 and 5 years and a payment of $500. It shows that you can take out a loan for $25,257.01.
The calculator also has additional optional fields of property value and down payment which is used to obtain the principle. So if you can afford to put down a down payment of $5000. Type in "5000" for "down payment". And that calculator will show property value of $30,257.01. In our case example, $30,257 would be the out-the-door price of the car that one can buy for a monthly payment of $500 for 5 years at 6.99% APR and a $5000 down payment.
Furthermore, you can switch to the summary tab of the calculator app and see the total interest that you would pay over the course of their entire loan. In our example, the total interest would be $4,742.99. Other tabs shows you table, graph, and charts of the scenario. If you try making these types of calculations on a four function calculator, you would find it pretty much to be impossible.
So next time a car dealer try to sell you on a particular monthly payment plan, you can reverse compute to find out the price of the car that you are paying. In any case, it is good to double check their calculations right there with them.
The concept is the same if you are working with home loan instead of car loans -- except the numbers would be much larger.
Article written December 2011 and is opinion at time of writing.
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