# Secured Loan Calculator - A Useful Tool For Loan Decisions

Updated on July 26, 2012

## What Is A Secured Loan?

A secured loan is a loan in where the borrower provides collateral in the form of some asset such as a car or property. The asset would be taken by the creditor if the borrower were to default on the loan. The loan is "secured" by the asset. An example would be a foreclosure where property may be placed as collateral and if default occured, the creditor could sell the home to regain some of the borrowed money. A secured loan will decrease the risk to the creditor, and in return, the borrower may often receive benefit in the form of lower interest rates. There are also cases where a borrower may not qualify for an unsecured loan but may qualify for a secured loan. An example of secured debt is a home mortgage.

## What Is An Unsecured Loan?

An unsecured loan is not backed up by collateral like a secured loan is. In the event of a default, assets will first be distributed to secured loan creditors before unsecured loan creditors. Also, unsecured loan creditors usually regain less of teh loan amount in comparison to secured loan creditors. Essentially the creditor is relying on a promise to pay back the loan amount. Interest rates are often higher than secured loans as the creditor is assuming the risk, therefore unsecured debt tends to be more expensive and less flexible. Examples of unsecured debt are personal loans for smaller purchases and credit cards.

## Secured Loan Calculator

A Secured Loan Calculator helps in making important financial decisions such as what type of secured loan is best for you and also allows you to see payments over time and how interest rate and loan amount may influence the numbers. It is important to understand all of these variables and how they work best with your personal goals.

There are several online loan calculators for several different types of loans. Below are links to a few of the top searched loan calculators. Feel free to also do a internet search of your own.

## Detailed Instructions

Here are detailed instructions to calculate a mortgage.

1. Enter the total mortgage amount.
2. Enter the term in either months or years.
3. Enter the mortgage interest rate.
4. Some calculators will offer interest calculate monthly or annualy. Select one.
5. Press calculate to view the detailed numbers.

Results may be given as capital and repayment (annually or monthly) or interest only (annually or monthly). Some calculators even take into account downpayment, property taxes, and homeowners insurance.

It's a good idea to try several different scenarios. This will help you optimize your plan or help you realize other steps needed to achieve your financial goals. Also, speak to a few different lenders for all your options. Things such as credit score, income, expenses, spending habits, and other loans all play a role in the type and amount of loan you may qualify for.

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