How to use an unsecured loan calculator

Most lenders use a simple calculator to calculate how long it will take to pay back the full amount in installments and your resulting APR (annual percentage rate). This is usually one of the first things you’ll need to do once you’ve decided to borrow money from an official lender.

If you are considering borrowing money, you will need to decide whether to go for a secured or unsecured loan. Although the mention of anything “unsecured” makes many people uncomfortable when it comes to finances, this method of borrowing is actually the best option for most people.

Furthermore, if you do not own your home (that is, if you rent your home), the only option you will have is an unsecured loan, since the property is not yours to guarantee any loan. While secured loans can be repaid over long periods (several decades, such as a mortgage), unsecured loans are the best option when it comes to smaller amounts.

Personal loans generally range from £ 500 to £ 25,000. Eligibility will generally depend on your credit rating, however, if you know that there are blemishes in your credit history, there are loan companies that will consider your application for personal circumstances only without running a credit check.

In this case, loan companies will generally ask you for proof of your monthly income to make sure you can pay your repayments. They can request bank statements, pay stubs, or speak directly with your employer to find out that you work there and receive the salary you have reported.

If you know that your lender will check your credit history, it is important to know where you stand with the credit reporting agency. The best way to do this is through a free website like Clear Score. You will be asked to enter your personal details and answer some security questions, but then you will have access to your credit file at any time.

Knowing your score is helpful, especially if you plan to apply for a mortgage or buy a business in the future. However, it is not the end: there are loan companies that will consider your application without conducting a credit check. Be on the lookout for “bad credit” lenders.

When you use a loan calculator, either online or through your bank or lender in person, you will be asked how much you would like to borrow. It’s a good idea to take the time to find out. Don’t be tempted to borrow a large amount that you will not be able to repay. The calculator will help you stay within your means.

You may be asked to state the purpose of your loan. This could be anything from moving house, paying for a wedding, or a consolidation. It is important to be clear about what you intend to use the money for, as this will tell you your lender’s decision, although of course no one will control it once the money is in your account.

The calculator will calculate what your monthly repayments will be, depending on how much you want to borrow and for what time. Personal loans can take anywhere from six months to six years to pay back, depending on how much you can afford per month.